Partial Inherited IRA Rollover
Clent age 55 is bene on deceased H’s 403(b). Client needs income and wants to go to an inherited IRA to get better investment options. Does not need entire amount of death benefit, so does not want RMDs to be based on whole amount. Administrator will only issue one check, either to her IRA or to inherited IRA. Can she put entire amount of DB in inherited IRA, then rollover amont she does not need to access to her own IRA. Or if entire amount goes into inherited IRA, can she waint until he would have been 70 1/2 (even though it is in a 403(b) to take RMDs?
Permalink Submitted by Alan Spross on Tue, 2008-04-15 18:46
The inherited IRA would probably be the way to go, not knowing exactly when husband would have been 70.5. But if he would not have been 70.5 for at least 4 more years, she would have no RMD requirement for that period, yet could tap the funds penalty free if need be. Then at 59.5 she could assume ownership of the IRA which would push back her own RMDs until she was 70.5.
If due to his age, RMDs would immediately be required, she could set up the IRA as inherited and then roll over amounts she is not likely to need to her own IRA. These solutions would be better than the restraints of a 72t plan. My impression is that recent spousal survivors have difficulty pinpointing the amounts they will need over time and therefore the 72t may not even fit after a few months.
Permalink Submitted by Al Fry on Tue, 2008-04-15 19:17
He was 55 also, so we are moving all to an inherited IRA.