Inherited 401k (non-spouse beneficiary): Can pre-tax funds be rolled into Roth
Hi,
I have a client who has inherited his father’s 401k, which contains pre-tax, as well as some post-86 and pre-87 after-tax money. Can either of those after-tax buckets be rolled into a Roth or beneficiary Roth IRA? My guess is no, but I’ve guessed wrong before.
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2018-12-06 03:39
Notice 2014-54 applies to beneficiaries of qualified plans as well as participants. Therefore, a non spouse beneficiary should be able to do a split direct rollover of the after tax amounts to an inherited Roth IRA while the pre tax amounts are directly rolled to an inherited TIRA. While a non spouse beneficiary cannot convert an inherited IRA, they can “convert” an inherited qualified plan. Since this combo is not often requested, it may take some convincing to get all custodian on the same page.
Permalink Submitted by Anon User on Thu, 2018-12-06 16:34
Thank you, Alan. As an aside, the situation I am dealing with is a deceased qualified plan with Vanguard as the QP custodian. They confirmed this as well, without any convincing, this a.m. Appreciate your timely response.