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Subject Author Date
non-spouse beneficiary 401k rollover to inherited IRA au109lee 02-10-2007
Posted by au109lee on February 10, 2007, 6:43 am
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 I am a non-spouse beneficiary of a 401k plan. My
understanding is that the Pension Protection Act of 2006
allows me to roll over the money into an inherited IRA.
However, when I tried to do this, I was told that I can't
because the Plan administrator has not authorized such
rollovers. The company administrating the plan refused to
tell me if, or when, I would be allowed to do a rollover,
and said I should just wait patiently. The Plan
administrator has not yet responded to my letter requesting
them to direct the company to process a rollover. Can
anyone tell me if the PPA grants me the legal right to such
a rollover or does it merely allow the plan to extend this
option to me if they have any interest whatsoever in helping
me?

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
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Posted by A.G. Kalman on February 12, 2007, 12:23 am
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 au109lee@yahoo.com wrote:

> I am a non-spouse beneficiary of a 401k plan. My
> understanding is that the Pension Protection Act of 2006
> allows me to roll over the money into an inherited IRA.
> However, when I tried to do this, I was told that I can't
> because the Plan administrator has not authorized such
> rollovers. The company administrating the plan refused to
> tell me if, or when, I would be allowed to do a rollover,
> and said I should just wait patiently. The Plan
> administrator has not yet responded to my letter requesting
> them to direct the company to process a rollover. Can
> anyone tell me if the PPA grants me the legal right to such
> a rollover or does it merely allow the plan to extend this
> option to me if they have any interest whatsoever in helping
> me?

Are you sure of the reason? PPA '06 allows for the
non-spouse beneficiary to perform a trustee to trustee
rollover starting 1/1/07. The IRS has not published
guidance as to whether a taxpayer who inherits a retirement
plan in 2006 but does not generate a distribution until 2007
qualifies for the new treatment. The text of the legislation
refers to the effective date being 2007 distributions.

The law allows the taxpayer to perform a rollover. There is
no practical reason for a plan not to perform the rollover
as it is no different than the mechanics of any other
rollover. However, until the plan can set up the necessary
process to initiate an "inherited" rollover and the trustee
receiving the distribution has a process in place to receive
an "inherited" rollover, you would have to wait.

--
Alan
http://taxtopics.net

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by HW \"Skip\" Weldon on February 13, 2007, 1:49 am
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>> I am a non-spouse beneficiary of a 401k plan. My
>> understanding is that the Pension Protection Act of 2006
>> allows me to roll over the money into an inherited IRA.
>> However, when I tried to do this, I was told that I can't
>> because the Plan administrator has not authorized such
>> rollovers.

> Are you sure of the reason? PPA '06 allows for the
> non-spouse beneficiary to perform a trustee to trustee
> rollover starting 1/1/07.

Many inherited IRA owners who inherited pre-2007 are locked
into high cost mutual fund choices from the present
Custodian. Does this new rule offer them the opportunity to
roll to another Custodian?

-HW "Skip" Weldon
Columbia, SC

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Phil Marti on February 13, 2007, 5:41 pm
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> Many inherited IRA owners who inherited pre-2007 are locked
> into high cost mutual fund choices from the present
> Custodian. Does this new rule offer them the opportunity to
> roll to another Custodian?

I haven't seen anything definitive about this, but,
borrowing from Mr. Justice Scalia, the "plain language" of
the statute says distributions in 2007 qualify.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by A.G. Kalman on February 14, 2007, 10:02 pm
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Phil Marti wrote:

>> Many inherited IRA owners who inherited pre-2007 are locked
>> into high cost mutual fund choices from the present
>> Custodian. Does this new rule offer them the opportunity to
>> roll to another Custodian?

> I haven't seen anything definitive about this, but,
> borrowing from Mr. Justice Scalia, the "plain language" of
> the statute says distributions in 2007 qualify.

Barring any guidance to the contrary, I agree with Phil. The
code section only discusses distributions that take place
starting in 2007. However, I interpret that to mean the
first distribution from the decedent's IRA to the
beneficiary. If a taxpayer inherited an IRA and the
distribution from the decedent took place and you now have
an inherited IRA, any distribution in 2007 would not be an
inherited rollover.

--
Alan
http://taxtopics.net

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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