401(k) Estate named Beneficiary
401(k) participant died (younger than 70 1/2)
No named beneficiary – estate was deemed beneficiary (per plan document)
Executor wants to roll/transfer the assets into an inherited IRA (via trustee transfer)
Executor is aware estate beneficiaries will be subject to 5-year payout rule
401(k RK) is pushing back – stating the assets (inherited by the estate) cannot be rolled into an IRA. Instead they must remain in the 401k and are “stuck” with the plan rules.
Question(s)
Can the account be transferred into an inherited IRA? I am under the impression the assets can be rolled so long as its done before the end of the year following account owner death
If so, can the inherited IRA be established in the names of the estate beneficiaries – under their SS#? With the understanding they will still be subject to the 5-year payout rule.
All guidance is appreciated.
Thank you
Permalink Submitted by David Mertz on Mon, 2019-12-16 14:32
The law only allows a 401(k) of the decedent to be rolled over to an inherited IRA by a “designated beneficiary.” The law defines a designated beneficiary as being an individual. Since the estate of the decedent is not an individual, a rollover of this 401(k) to an inherited IRA is not permitted.