New Rules for Non-Spouse Benes of QRPs?
Are Distributions to Nonspouse Beneficiaries Subject to 20% Mandatory Withholding?
Excerpt: “[Once new rules are] effective, all nonspouse beneficiary distributions will be subject to the normal rules for eligible rollover distributions, including the 402(f) notice and including the 20% mandatory withholding when the funds are paid to the nonspouse beneficiary, instead of being directly rolled to an inherited IRA.” (McKay Hochman Co., Inc.)
Permalink Submitted by mk foss on Mon, 2009-08-10 22:52
Currently Section 402 provides withholding for all distributions that can be rolled over that are not rolled over. In 2010 when nonspouse beneficiaries have the ability to roll over inherited benefits, the 20% should apply and all of the notification requirements – such as tax treatment of distributions and ability to roll over should apply as well.