403(b) rollover to IRA
403(b) account owner 60 died in 2015
surviving spouse, 50, 100% sole primary beneficiary
I know the surviving spouse can take distributions (as needed) by establishing inherited 403(b) without penalty –
Question
Can the surviving spouse rollover the inherited 403(b) to an inherited IRA and subsequently take pre age 59.5 distributions penalty free? I this this is allowed. I am looking for verification
Thank you in advance
Permalink Submitted by Alan - IRA critic on Tue, 2015-06-16 18:40
While a transfer to an inherited IRA is not clearly addressed in the tax code, the IRS authorized this in PLR 2004-50057. Some custodians will set up a properly titled inherited IRA to receive a spousal beneficiary rollover and some will not. Using a larger IRA custodian will improve the chances of establishing such an account. The surviving spouse would generally retain the inherited IRA until 59.5 and then roll it over to their own IRA. There are no RMDs required from the inherited IRA until the year the deceased spouse would have reached 70.5, so there would be no RMDs for 20 years if she rolls it over at 59.5. However, if she needs distributions before then, they will be penalty free when taken from the inherited IRA.