401k Assets inherited by an estate
A 52 year old client passed away and had a 401k. He failed to name a beneficiary of his 401k so the beneficiary has defaulted to his estate.
I read in a past newsletter that qualified plan assets left to an estate are not eligible to be rolled over to an inherited IRA in the name of the estate. Is this true?
If so, is the only option then for the executor to initiate a taxable lump sum distribution of the inherited assets?
Thanks!
Permalink Submitted by Alan - IRA critic on Sat, 2017-09-30 00:05
Yes, it is true. If the sole beneficiary of the estate is a surviving spouse, it is sometimes possible for the spouse to do a rollover as several PLRs have approved this, otherwise there is no chance. Technically, the plan can be distributed under the 5 year rule, but typically the plan will require a lump sum distribution within a limited time frame.