Pension death benefit distribution to a non-spouse beneficiary
I am working with a non-spouse beneficiary on a death benefit distribution from a building trades pension plan that indicates in their distribution paperwork that it is an option to do a direct rollover of their distribution to EITHER a Traditional IRA -OR- an Inherited IRA. My understanding is that a non-spouse beneficiary MUST do a rollover to an INHERITED IRA and subsequently begin the RMD annually under the Single Life Table. Is anyone aware of a situation or pension plan that would allow a direct rollover of a non-spouse beneficiary distribution to a Traditional IRA???
Permalink Submitted by Alan - IRA critic on Thu, 2015-01-22 23:53
No. Something is wrong with the plan wording, or possibly the wording is being taken from a section dealing with spousal beneficiaries. A non spouse beneficiary of a qualified plan can never be treated as more than a beneficial owner. A direct rollover can go to either an inherited TIRA or an inherited Roth IRA. Subsequent RMDs from either of those inherited IRA types can either be life expectancy RMDs or 5 year rule RMDs in the case of a plan participant’s death prior to the required beginning date where the plan requires or the beneficiary elects the 5 year rule. Note that all inherited IRAs are either inherited traditional or inherited Roth IRAs.