Inherited 403b with Post-Tax contributions
A widow recently made claim on her deceased husband’s 403(b) plan. A small portion of the balance, about $7,100, was post-tax contributions. She requested those funds be paid as a Roth conversion directly to a Roth IRA in her name. The record keeper would not execute the transaction and, instead, made out a distribution payable directly to her.
Can she make in indirect rollover of these funds directly to her Roth IRA? Prior postings seem to support that this is available but I want to make certain that this being a spousal death benefit claim does not preclude her from being able to do it. There was no distribution of taxable earnings with the distribution of post-tax contributions.
Thanks in advance!
Permalink Submitted by Alan - IRA critic on Thu, 2013-08-08 18:01
Nick, this is one of situations involving “isolation of basis”, where there is some uncertainty since the IRS issued Notice 2009-68. However, there has been no follow up with respect to 1099R reporting instructions, and people have been able to effectively roll these post tax dollars over to a Roth IRA with no taxes due. This is the same for a surviving spouse as it would be for the employee. Some administrators will do a direct rollover to the Roth and some like this one will not and leave it up to the employee or beneficiary.