403(b) to IRA for a sister as the beneficiary
hello,
there is a sister who inherited her sister’s 403(b). deceased was not of the rmd age. She was told by the 403(b) plan she can leave the money there no time restriction. How true is that? I thought she would have either 5 years or life extectancy as options. Could you comment on that ?
Permalink Submitted by Alan Spross on Tue, 2011-03-08 03:17
If she is allowed to leave the plan in place, that still does not relieve her of taking RMDs, the first due by the end of the year following the year of death.
It is better to do a direct transfer to an IRA, particularly if the plan has a 5 year rule requirement, which is rare but possible. The direct rollover must be done by the end of the year following death, or she remains stuck with the plan provisions, so if this plan had a 5 year rule requirement, she could not escape it by waiting after that date. Otherwise, she can take life expectancy distributions from the inherited IRA if she does the direct rollover by the deadline. Finally, she also has the option of doing a Roth conversion to an inherited Roth IRA, but that would of course be taxable and the inherited Roth would still be subject to RMDs.