Non-spousal beneficiary for non-qualified deferred comp
I have a client that is a non-spousal beneficiary for a non qualified deferred comp account. Prudential has given us conflicting advice on what the beneficiary can do with the account. Are there specific options for the client or are they company specific.
At first, we were told he has to roll to his new account and then he has the ability to roll it to his ira. They sent paperwork instructing us on how to proceed. We filled it out only to receive a notification two weeks afterward informing us this couldn’t be completed.
Now we are being told his only only is to annuitize or take lump sum and pay siginficant taxes.
Has anyone had this issue? Any suggestions?
Permalink Submitted by Al Fry on Fri, 2008-04-25 20:19
They are correct. NQDC can never go to an IRA, unless it is a Governmental 457(b) plan.
Permalink Submitted by Alan Spross on Fri, 2008-04-25 21:49
And IF is is a govt 457b plan, it is still optional at this point whether the plan will provide the inherited IRA transfer. The IRS has flip flopped on this issue already, but at present Notice 2007-7 still applies which stated that the transfer to an inherited IRA was up to the discretion of the plan. Maybe this is why Prudential has been inconsistent.