HEART Act
I work with Survivor Outreach Services at Fort Campbell, KY. I am a financial counselor working with families of our Fallen. One of my clients is a Surviving Spouse of an active duty Soldier who herself is on active duty. Unfortunately she was not the beneficiary of the Death Gratuity nor the SGLI but she had FSGLI on her husband. Do you know if she could contribute her FSGLI funds to the Roth IRA under the HEART ACT provisions?
Permalink Submitted by Alan Spross on Thu, 2012-05-03 19:29
The attached IRS Notice addresses the Roth provision of the Heart Act starting on p 21. The provisions only allow SGLI or Military Death Gratuities to be rolled over to a Roth IRA. SInce there is no mention of FSGLI proceeds here, they cannot be rolled over. It is probably quite rare that the spouse would not be the SGLI beneficiary.
http://www.irs.gov/pub/irs-drop/n-10-15.pdf
Permalink Submitted by Stephen Stech on Wed, 2012-05-09 20:41
A follow on question. What is considered an eligible survivor. Can parents of a service member who are the SGLI beneficiaries put the money into a ROTH IRA? If only one is listed as the beneficiary is only one eligible for the ROTH or can you split the funds into ROTHs for both the parents? Thanks.
Permalink Submitted by Alan Spross on Wed, 2012-05-09 20:58
Only the parent that is named as the SGLI beneficiary can roll over the proceeds to a Roth IRA.