Inherited 403(b) After RBD
Can anyone confirm that if a child inherits a 403(b) after the decedent’s RBD that they will be able to create a beneficiary IRA and continue distributions over their life expectancy rather than the decedents remaining life expectancy.
Also if the decedent was still employed at time of death by the organization sponsoring the plan when will the first required distribution have to come out prior to the rollover to a beneficiary IRA?
Thank,
You
Permalink Submitted by Alan Spross on Wed, 2008-03-19 21:53
The assets can be transferred to an inherited IRA set up by the non spouse beneficiary, however offering the transfer remains optional for the plan at this time. If they refuse the transfer, they still must offer RMDs based on the decedent’s remaining life expectancy if the decendent passed after the RBD. If the transfer is made to the inherited IRA no later than 12/31 following the year of death, then the beneficiary can use their own life expectancy, if longer.
However, if the decedent was still working, they may NOT have reached their RBD under the plan. That depends on the plan provisions with respect to defining the RBD for employed staff. A further complication could exist if the plan accounts for pre 1987 accruals, which carry an age 75 RBD, also subject to whether employee is still working or not.