IRA Rollover
The widow needs to rollover her deceased husband’s 401(K).
Is it better to rollover into a Traditional IRA or ROTH IRA?
She is 40 and working part-time in a department store.
This is important:
The funds were already withdrawn and taxes were already withheld.
There is 60 days remaining to rollover
Permalink Submitted by Alan - IRA critic on Fri, 2018-08-31 00:03
She will have to replace the withheld amount in order to avoid taxes on the withholding and complete the rollover. At age 40 she will probably need access to these funds penalty free, therefore any amount she thinks she may need prior to 59.5 should be rolled into an inherited IRA or inherited Roth IRA. With respect to TIRA vs Roth for the inherited (or owned accounts), the only amounts that should go to the Roth are amounts for which her current tax rate for the Roth rollover will be lower than what she expects her tax rate to be in retirement. Her tax rate both now and in retirement will be higher when filing single. As for RMDs from inherited accounts, if she is the sole beneficiary, RMDs do not start until husband would have reached 70.5.