Grandchild named as P/S participant’s beneficiary
My 66 year old client died naming his 7 year old grandchild as beneficiary of his company’s profit sharing distribution.
Can the grandchild roll that into an Inherited IRA account? If so can that be converted to a ROTH?
Permalink Submitted by Bruce Steiner on Fri, 2010-11-19 19:45
He/she can transfer it to an inherited IRA, either traditional or Roth. Since the grandchild is a minor, the financial institution may require a custodian or guardian.
Permalink Submitted by Joseph Arsenault on Fri, 2010-11-19 19:49
Just to clarify, if the money is rolled to an inherited traditional IRA, then the Roth option is out the window. Maybe Alan can clarify this because I am not 100% sure but thats what I thought.
Permalink Submitted by mk foss on Sat, 2010-11-20 02:25
When someone is naming a minor as a beneficary of any type of IRA or retirement plan, they should also name a custodian under the state’s uniform transfers to minor’s act so that elections can be made.
An inherited QRP can be converted to a Roth, but an inherited IRA cannot so you want to think hard about the Roth before you do an IRA rollover.
Some folks think Congress will clear up the disparity for nonspouse beneficiaries. Based on recent performance with the estate tax and extenders bill, I wouldn’t plan on that happening.