Permalink Submitted by Alan Spross on Fri, 2007-11-02 23:55
Usually, an IRA custodian can be found to set up the beneficiary IRA. This should be rather automatic by now, but for some reason the spousal transfer to an inherited IRA still remains based on PLR 2004 50057, because the IRS Regs have not formally addressed this. And now we have the non spouse transfer that will actually get into the Regs before the spouse transfer. It should not be that hard to find a custodian to set up the account, but the funds should move by direct transfer to the inherited IRA. She will then retain the option to assume the IRA as her own at anytime she wishes, typically after reaching 59.5.
Don’t forget to check for any NUA potential in the 401k. NUA is lost once the funds land in an IRA.
Permalink Submitted by Alan Spross on Fri, 2007-11-02 23:55
Usually, an IRA custodian can be found to set up the beneficiary IRA. This should be rather automatic by now, but for some reason the spousal transfer to an inherited IRA still remains based on PLR 2004 50057, because the IRS Regs have not formally addressed this. And now we have the non spouse transfer that will actually get into the Regs before the spouse transfer. It should not be that hard to find a custodian to set up the account, but the funds should move by direct transfer to the inherited IRA. She will then retain the option to assume the IRA as her own at anytime she wishes, typically after reaching 59.5.
Don’t forget to check for any NUA potential in the 401k. NUA is lost once the funds land in an IRA.