Inherited 403B
My client’s parents recently passed away. They both held 403B’s. Her father died first in 2017, and his 403B went to his wife. however, the 403B was titled in his wife’s name but had the designation of B/O the decedent. It appears to me that his wife held and Inherited 403B. It was not rolled into her own 403B.
Now my client just set up an Inherited IRA QP to receive the inheritance from her deceased mother’s 403(b) who died this year. My question is can the other rollover (her mom’s 403B B/O her father) also be rolled over into the same Inherited IRA or does that fall into the category of an Inherited Inherited IRA?
I’m sorry if this is a confusing question. Please let me know if you need any other information.
Permalink Submitted by Alan - IRA critic on Wed, 2020-09-23 17:25
Wife should have rolled the inherited 403b into her own IRA. By retaining her interest as the beneficiary of the 403b and naming the client as her beneficiary excludes the client from being able to do a direct rollover to an inherited IRA. The reason for this is only a designated beneficiary per Sec 401(a)(9) E is eligible for a direct rollover and a designated beneficiary is one named by the employee, not a beneficiary of the employee. Therefore, the client at best is limited to the distribution options allowed by the 403b to successor beneficiaries. Client may well be required to take a lump sum distribution.