Inherited 401k to inherited IRA rollover

Submitted by chris erickson on Thu, 2016-12-22 20:51

Hi,
An investor (niece i.e. non-spouse beneficiary) has two accounts titled as follows:

Inherited 401k from deceased uncle
Inherited IRA from deceased uncle

As you can see the accounts have already been re-registered under the niece’s name and SSN and denoted as inherited non-spouse retirement accounts.

Can the inherited 401k be rolled over into the inherited IRA to consolidate the two accounts? (assuming this is done after any RMDs from the inherited 401k are taken)

Thanks!



Submitted by Alan - IRA critic on Thu, 2016-12-22 22:03

  • The accounts can only be consolidated if the RMD divisors are identical and the uncle owned both accounts. Usually the divisors are the same but there are exceptions such as if one of the accounts was already inherited by the uncle or if there was another older beneficiary in addition to the niece and she did not create separate inherited accounts by the deadline. Another exception would be if the IRA was inherited by the estate and then assigned to the niece as beneficiary of the estate.
  • Also, note that a non spouse beneficiary has the option to directly roll an inherited 401k account into an inherited Roth IRA. This cannot be done with an inherited TIRA account. Of course taxes would be due if rolled into an inherited Roth, and RMDs must continue regardless. 

 



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