Options for 403b Nonspouse Multiple Beneficiaries
My brother and I are the beneficiaries of my deceased mother’s 403b. Mother died in Dec 2008 at the age of 75, and she had already begun to take her RMD from the account. We have not done anything with the plan yet. Please help me understand our options, we would like to transfer to an IRA and withdraw via RMDs, is this still possible?
Thanks in advance for your insight.
Permalink Submitted by mk foss on Mon, 2010-04-19 21:45
Normally RMDs begin for beneficiaries in the year after the death, but since no RMDs were required for 2009 you sill have time to structure things. You will need to check with the 403b administrator. Some of the 403bs are similar to retirement plans and disbursement to beneficiaries is relatively routine. In other case the 403b will be an actual annuity contract that may not be very flexible. Life expectancy for each of you from an inherited IRA is doable but the number of steps required to get there will vary depending on the nature of the 403b that you have inherited.
Permalink Submitted by Alan Spross on Mon, 2010-04-19 23:57
Since you inherited a 403b plan and not an IRA, you have the option of doing a Roth conversion to an inherited Roth IRA if you wish. You would need to take out your 2010 RMD prior to any conversion or transfer to an inherited traditional IRA. You would also have to take any RMDs that your mother did not take prior to passing.
Although 2009 RMDs were waived, a deadine of 12/31/2009 still applied for purposes of creating separate accounts under which you each could use your own life expectancy for RMDs. You can still set up separate accounts, however the RMDs for both of you will have to be based on the life expectancy (non recalculated) of the oldest.
Note that one could do a Roth conversion and the other just a TIRA rollover, you both do not have to elect the same type of inherited IRA. But you CANNOT take a distribution without it being taxable. All funds must move by direct trustee transfer.