Rolling Over Cash Balance Plan into IRA
I need clarification:
Client (age 59) inherited a cash balance from husband who passed away. She can take a lump sum or annuity beginning now. She is still working and can do without the money now. I know we can do lump sum rollover into a Rollover IRA.
Can the annuity payments (e.g. a 10 year term certain) be directed into a rollover IRA as well? She would direct the custodian to direct her annuity stream (monthly) into a Rollover IRA without any withholdings, if this is possible.
thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2024-01-24 22:01
Period certain annuity payments can be structured for a term just less than 10 years, and in that case they become eligible for rollover. Life annuities or periods certain of 10 years or more are not rollover eligible. That said, I don’t know that there are any plans that automate direct rollovers (avoids withholding). Receiving these payments as distributions would require the net of mandatory 20% fed withholding to be rolled over manually and the withholding to be replaced to result in a non taxable rollover. The one rollover limit does not apply to non IRA distributions.
Permalink Submitted by David Manteau on Thu, 2024-01-25 01:59
Thank you so much, as always Alan!!!