401k roth

Submitted by Rose Robins on Mon, 2013-08-05 20:46

I am still trying to get my husbands retirement accounts handled. His 401k Roth Profit Sharing Plan with the local bank tells me I have to close his account out and then put the money in my account. I am the trustee for the 401k Roth so before I do someone that that is not right I just want to make sure I should do what they say. I think all I would need to do is show them the paperwork for the company 401k plan showing I am a trustee and they should be able to change to my name. HELP!



Submitted by Alan - IRA critic on Mon, 2013-08-05 21:06

Is your husband deceased? If so, you could roll over the Roth portion of his plan to your own Roth IRA. There would also be a pre tax account if any profit sharing or company matching contributions were made.

Submitted by Rose Robins on Mon, 2013-08-05 21:34

yes he is deceased.  Since this is a company 401k Roth and the company is still own going and I am the trustee can I not setup an account for the 401k Roth to go into a new 401k Roth in my name?

Submitted by Alan - IRA critic on Tue, 2013-08-06 00:11

  • No. While a surviving spouse beneficiary can roll over the IRA to their own account, they cannot own an inherited 401k plan. Your choices are therefore to maintain the plan as beneficiary OR roll it over to an IRA. You could maintain the IRA as either inherited or OWNED, so if you want to be treated as the owner the only solution is to roll it over to an IRA. The Roth 401k would be rolled to a Roth IRA, and the pre tax account balance would be rolled to a traditional IRA if you did not want to be taxed. You could also roll the pre tax account to a Roth IRA, but that would be a taxable conversion. 
  • You are the beneficiary of the current plan, not the trustee. The trustee is still the plan administrator except in rare cases of individual 401k plans where the owner served as his own trustee and there is no other administrator. IF that is what you inherited, it is rare enough to result in some challenges to completing the rollover. Do you want the same bank to be the IRA custodian for your IRA?
  • NOTE: IRA ownership should be postponed until you are 59.5 unless you do NOT need any funds until 59.5, or in the case of a Roth 401k it was started before 2009. If under 59.5, any taxable distributions you take will be penalized. If you maintain the account as the beneficiary, you can roll it over to an owned Roth IRA anytime. but if you roll it over too soon it can result in penalties. When did he start the Roth 401k and was it an individual 401k or was it an employer sponsored plan and he was an employee?

Submitted by Rose Robins on Tue, 2013-08-13 00:21

My plan administrator advised that I transfer the assets to my 401k Roth since the company is still in existence.

Submitted by Alan - IRA critic on Tue, 2013-08-13 00:54

You mean transfer the inherited Roth 401k balance to your OWN Roth IRA? As stated above, you cannot become the owner of a Roth 401k. You are probably better off rolling it over to your own Roth IRA than keeping it as an inherited Roth 401k.

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