Beneficiary IRA rollover
We met a person today whose significant other died. He was 60. She is 55 and the beneficiary. She went into WAMU and they told her it was tax-free and distributed the entire balance to her last week. I am wondering if she can do a 60 day rollover and keep it in a beneficiary IRA and begin life expectancy withdrawals. Any one have experience with this?
Permalink Submitted by Alan Spross on Wed, 2008-02-13 21:35
Some people in these institutions should not be dealing with products or situations that they do not understand.
1) The distribution would not be tax free unless it was a fully qualified Roth IRA.
2) Options with respect to a significant other depend on the laws of the state of the investor’s domicile, which are incorporated into the IRA agreement. If the beneficiary is not considered married to the investor at investor’s death under state law, they are a non spouse beneficiary. A non spouse beneficiary cannot roll over a distribution to either their own account or to an inherited IRA account, and a distribution to such a person would be fully taxable to the extent it would have been to the investor. Hopefully, she knows that the specifics of the relationship to the decedent will allow her to be considered as a spouse.
Permalink Submitted by Al Fry on Wed, 2008-02-13 22:13
And of course DOMA (the Defense Of Marriage Act) does not allow spousal continuation unless a marriage is recognized by Federal Law (not State law).
Permalink Submitted by Al Fry on Wed, 2008-02-13 22:19
Excerpt: “The legalization of same-sex marriages in some states, such as occurred in Massachusetts in 2004, will not enable same-sex partners to receive spousal retirement benefits under private pension plans, Federal employee pension plans or Social Security, according to a study by the Congressional Research Service (CRS). The Defense of Marriage Act (DOMA) effectively restricts spousal benefits to persons in traditional marriages.” (CCH Pension and Benefits)