Non Spousal Inherited 401k

Submitted by Christopher Richardson on Thu, 2018-04-19 13:48

I have done a trustee to trustee transfer from a 401k to a non spousal beneficiar ira in a brokerage account A)can I now divide part of the account by rollover into an annuity and/or an alternative investment B) if I can divide part of it, will a single distribution from one of the 2 accounts satisfy the rmd so long as it is the sum of the amounts required in each one? I anticipate multiple investment timeframes for the account. Inheritor, Spouse and Daughter



Submitted by Alan - IRA critic on Thu, 2018-04-19 16:29

  • You cannot do a 60 day rollover, but you move part or all of the account by direct trustee transfer to a new inherited IRA account. Be aware that you must maintain enough liquidity to meet your annual beneficiary RMD, and yes, you can aggregate the RMD in any combination between the two accounts. Some annuities may restrict your distribution options for inherited accounts, so once you decide how you want to handle your RMDs you should ask the insurance company if there will be any issues or restrictions. For example, not all insurance companies allow life expectancy RMDs if the 401k owner passed prior to the RBD. Your RMD divisor can also be affected if you did not transfer to the inherited IRA before the end of the year following the year the 401k owner passed.
  • Not sure what your last sentence means. What year did the owner pass and at what age, and in what year was the direct rollover made to the inherited IRA?   Were there other beneficiaries of the 401k?  Note that as long as the proper RMD is distributed, investments within the inherited IRAs can be changed at will. You just need to avoid any liquidity problems in meeting the annual RMD.

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