Non Spouse 401k Beneficiary
Are 401k plans and custodians required to allow stretch IRAs for a non-spouse beneficiary? I can’t seem to get a definite answer in my research. A client of our has a substantial 401k balance with a former employer and we are concerned the stretch feature might be lost in the event of a simultaneous passing of he and his wife. Can anyone reference the most up to date rules on this topic?
Permalink Submitted by Alan Spross on Fri, 2011-04-08 17:12
Yes, starting in 2010, qualified plans were required to offer a direct rollover to an inherited IRA or inherited Roth IRA. Notice 2007-7 made this optional, but under WRERA signed 12/08 it was made mandatory starting for plan years after 2009. The following is the Technical Explanation of WRERA, see the second paragraph on p 11:
http://www.jct.gov/x-85-08.pdf
As for simultaneous deaths, the statutes vary from state to state with respect to the Uniform Simultaneous Death Act and state survivial periods.
Permalink Submitted by robert belosic on Wed, 2011-05-11 15:05
the way i understand it most 401k:s and company plans do not allow the stretch but in 2010 a trustee to trustee transfer is mandatory for non-spouse transfers