You could always inherit all retirement accounts. What has changed are the rules involving rollovers of qualified plans (401k, 403b, etc…)

The PPA (Pension Protection ACT) 2006 “allows” but does not “require” plans to offer rollovers to an Inherited IRA. Then you can elect to receive only the RMDs (Required Minimum Distributions) for a lifetime distribution in an Inherited IRA. This will allow you to “stretch” the IRA and receive the maximum benefit of tax deferral.

However, since the choice on whether to allow this rollover is up to the plan, you should contact the plan to determine if they have changed their plan to allow this. Why this is important is that while all plans can offer both five year and lifetime distributions. “Some” plans only offer the five year rule. Even if the plan does not offer the rollover, it “might” offer the lifetime distribution option. Contact the plan immediately.

NOTE: Supposedly, congress had not intended the rollover to be optional. Last year the Senate passed a technical correction to fix this, but the House did not pass it before the end of the year. Now this year the House has passed the correction, but the Senate has not passed it even though it has been on their calender since April.

If the mother passed away this year, the daughter has until 12/31/2009 to do the rollover, and/or select lifetime distribution and begin RMDs. However, she should really contact her mothers employer where this 403b was held and get the relevant information now.

I strongly encourage you to advise her to try and get lifetime distributions for these accounts. Also, a key point is that the rollover if done “must” be a direct trustee to trustee transfer.

• Flag as spam
• Log in to Reply