inherited 401
My husband passed away in 2020 and I am the beneficiary of his 401. I know the funds have to be withdrawn after a max. of 10 years after his passing. At any time during that 10 year period am I free to roll the funds into my own ira ?
My plan is to roll the 401 into my own IRA and not a spousal since at the planned time of the rollover I will be 591/2 and can make penalty free withdrawals. Husbands DOB Jan 1968 & DOD July 2020. My DOB Sept 1969. My main concern is if I can do it at any time during the 10 year period.
- You can do the spousal rollover to your own IRA anytime. There is no 10 year limit because as a spousal beneficiary you are an EDB (eligible designated beneficiary). And as a sole surviving spouse you could also maintain this as an inherited 401k with no annual RMDs until the year your husband would have reached age 75, which is 20 years from now.
- Of more immediate concern, does the 401k allow you to take partial distributions anytime you need them? It is possible that the 401k might only allow a total distribution. If no partials, you could have the 401k balance directly rolled into an inherited IRA where you could take penalty free partial distributions with no restrictions.
- Sec 327 of Secure Act 2.0 becomes effective in 2024. This “may” provide you with more options such as being treated as the owner of the 401k. However, the IRS will have to provide further clarity about this as several questions exist at this point. But this is something you may want to check into a year from now if you like the 401k plan options, expenses, and service.
- Again, you could wait until 59.5 and then do a direct rollover to an owned IRA, and even if you took no action you could still do this anytime in the future. There is no 10 year time limit for spousal beneficiaries.
Permalink Submitted by Alan - IRA critic on Fri, 2023-01-13 21:04
Yes, you can do the spousal rollover to an IRA anytime. When you do that should be guided by your age and or age of husband in 2020. You are not subject to the 10 year rule, but may be required to take annual beneficiary RMDs. Can be more specific with DOB and DOD of husband, and the age you will reach in 2023.