Spouse inherited TSP
I have a male client who is 72. His wife died 5 years ago at the age of 58. He did a spousal inherited plan so he could delay rmds. She’d be 63 now. The money is still at the Federal Govt’s TSP. Is there a rule that says the money has to stay there? Can he still do a spousal inherited IRA at another institution? I guess I’m asking if you can do a trustee to trustee transfer on a spousal IRA. Then do the rollover in 6 years? Thanks
Permalink Submitted by Alan - IRA critic on Mon, 2018-04-16 16:57
Yes, per PLR 2004 50057 the client can open an inherited IRA and do a direct rollover from the inherited TSP. Client can then elect to assume ownership of the inherited IRA any time, but would probably wait another 6-7 years. That said, since marginal tax rates will be lower for this period of time, perhaps he should be taking some IRA distributions or even converting some to his own Roth IRA which will be exempt from future RMDs during his life time. There is no rule that requires his TSP money to remain there.