My mother, who recently died in January 2025, had a 401(k) balance, and had been taking RMDs from it for several years, usually around December 15 of each year the plan administrator calculates and would send her the RMD for that calendar year.  The 401(k) was originally my father’s from his employer.  It was assumed by mother upon his passing over 25 years ago.

I am the sole beneficiary of all her assets.  The 401(k) listed me as the sole beneficiary.  I contacted the plan administrator, supplied the death certificate, etc. and they have transferred the assets to me, in a new inherited account within the plan.  I have been advised, that due to my status as a non-spouse beneficiary that I do not qualify to remain in the plan and I have 60 days to roll the assets over to an IRA, or they will liquidate the positions and send me a payment for the balance, after taxes are withheld, etc.  I do not want that to happen, as I prefer to roll the assets over to an IRA so as to preserve tax avoidance on the whole amount, not increase my income above what I had been planning in terms of my marginal tax bracket, incur IRMAA costs for Medicare, and want the ability to stay within income ranges to be able to continue to contribute to my own Roth IRA.  I am age 68.  I am aware that I will have to begin RMDs from the rolled over IRA in 2026 to comply with the rules for 10 year depletion of the assets, and that is my plan.

I am also aware that even though my mother is deceased and died in 2025, the IRS rules require an RMD from the account in 2025, the amount figured as if she were still living, and based off the 2024 year end balance & the factor in the single life table for her age if she were still alive (would have been 91 this year).

I have set up an inherited IRA with my broker.  The assets in the 401(k) consist of post 1986 after-tax contributions, company stock that was my father’s employer contributions to the 401(K), a money fund and an equity mutual fund that have significant gains from both my father’s and his employer’s contributions.  There are also before-tax contributions that my father made.  All these amounts I have.  Before my mother passed, she received a statement of what her RMD will likely be for 2025.  I took all the above information, and allowing for after-tax contributions balance year end 2024, was able to calculate the taxable 2025 RMD to the exact penny that the plan administrator was showing in the statement they sent.

The plan administrator also advised that I will qualify for the NUA rules for the company stock portion.  There is significant appreciation over the cost basis of the company stock, so I intend to roll that into my regular brokerage account.  I will probably never have the need to sell it, and it pays a great dividend.

That leaves the other assets that are in a taxable money fund and equity mutual fund.  Those will be liquidated and I will roll that over into the inherited IRA I set up, and as stated above, will begin taking RMDs on it in 2026.  It will be invested very conservatively within the new inherited IRA.

My questions have to do with the after-tax contributions portion of the 401(k).  I know when I retired, I was able to roll my after-tax contributions into my own Roth IRA.  I do not know if that is an option for me to do that with the inherited after-tax contributions from my mother’s 401(k).  It is my preference, as it is an easy way to add to my own Roth IRA separate from the annual contributions limit if that is possible.  Is it possible to request that be done, or does it require that a separate inherited 401(k) IRA be set up to receive those funds, subject to the 10 year period, RMDs, etc. ?  If a separate inherited Roth IRA must be done, I am thinking it may not be worth it as it is only around $4000.

My second question concerns if I must do an inherited Roth IRA and I decide against it, the plan administrator has already told me they can simply send me a check for the after-tax balance, how would I account for that in the RMD to be done this year based on my mother’s 2024 year end balance and her life factor from the single life table.  This will all happen within the next month.  If I take the after-tax portion directly now and before the 2025 RMD is figured, how will the tax due on the before tax amounts be figured ?  In prior years when they have prepared her RMD payment, they divided the after-tax portion by the appropriate single life table factor for her age and reduced the taxable portion of the RMD by that amount and reported the taxable amount on her 1099s.  Should I attempt to see if the plan administrator can go ahead and prepare a 2025 RMD before they roll the balances over and the account is closed ?  I can’t see how to do it cleanly if the RMD is done after that.  Finally, assuming the rollovers get done soon and the 2025 RMD is done later in the year and not by the plan administrator, who will calculate and determine the RMD and figure the taxable and non-taxable portions if the whole after-tax portion has already been sent to me ?  I have received a lot of conflicting answers to the last question.  When I asked the plan administrator if they would be doing an RMD based on my mother for 2025 before the account is closed, they said no.  However, my broker told me that his experience was that the plan administrator would attempt to do that before they close the account and roll the amounts out.  The broker says they cannot since they will not have the information related to 2024 and my mother to figure it.

Not a lot of time to get this figured out.  Thanks anyone who can help me decide the best path for the after-tax portion.