Inherited 401k to Inherited IRA

Submitted by Jonathan Sard on Thu, 2018-08-16 14:28

A 55 year old woman inherited her 78 year old’s father’s 401k and she is also the beneficiary of one his regular IRAs. We have two questions:
1. If she leaves the Inherited 401k assets with the current custodian, will she maintain full creditor protection on those dollars, or will it be the same from a creditor protection standpoint for her to transfer the 401k to an Inherited IRA?
2. The father also had an IRA at another institution. If we transfer the 401k to an Inherited IRA, can we also transfer the other IRA into the same Inherited IRA? Since the deceased owner and the IRA beneficiary are both the same people, I thought this would be doable.

Thank you!



Submitted by Alan - IRA critic on Thu, 2018-08-16 15:26

  1. There are only a handful of states that provide creditor protection for inherited IRAs based on the domicile of the beneficiary. Elsewhere, the inherited 401k will provide protection while the inherited IRA will not. Therefore, she need to check to see if her state is one of the few that provides protection.
  2. Yes, as long as the RMD divisors are the same. They could differ if there were other beneficiaries and separate accounts were not established by the deadline.
  3. Note that she could convert the inherited 401k to an inherited Roth IRA if she wanted to, but cannot convert the inherited IRA.

Add new comment

Log in or register to post comments