401k to IRA rollver for estate as beneficiary
401k participant passed away with estate as beneficiary (by intent or neglect).
Son of participant and sole beneficiary of estate would like to establish a beneficiary IRA at fund company in order to receive payments over decedants remaining single life expectancy vs as a lump-sum from the plan.
Can Custodian establish a bene IRA fbo deceased estate and if so, do non-spouse and/or non-designated beneficiary direct rollover/tranfers apply in this case?
Permalink Submitted by Alan Spross on Thu, 2011-08-18 00:28
Assuming there is no spouse who would in most cases be deemed to be automatic designated beneficiary of a qualified plan. Also, your reference to the decedent’s life expectancy presumes decedent passed on or after his RBD.
If so, the length of time the estate will be open may determine the course of action. RMDs must be taken and perhaps one or more of them will be distributed and passed through the estate to the beneficiary. The IRA can then be assigned to the beneficiary (before or after the estate terminates) and a beneficiary IRA account opened for the estate beneficiary. From there the beneficiary will have full control and can change IRA custodians by direct transfer if they wish.