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Found 7 results

  1. We've had several deaths (post-SECURE Act) in different defined benefit plans, unfortunately, by participants who did not have designated beneficiaries on file. Our defined benefit plan (volume submitter master) document identifies the following hierarchy for distributions to non-designated beneficiaries: surviving Spouse; children, per stirpes; surviving parents, in equal shares; estate. My overall question is - under current regulations, is a defined benefit plan permitted to make a distribution to an Inherited IRA (via direct transfer) to a non-designated beneficiary? If yes or maybe, does it matter who the non-designated beneficiary is? We have the following true scenarios to deal with: Terminated Participant A (died age 64 before NRA) has a surviving Spouse, and the distribution amount is over $5000. Also, the plan is terminating. Active Participant B (died age 32) only has one minor child, and the distribution amount is under $1000. The plan is ongoing. Active Participant C (died age 56) only has surviving parents (both older than age 72), and the distribution amount for each parent is between $1000 - $5000. The plan is ongoing. Terminated Participant D (died age 64 before NRA) has no Spouse, no children, nor any surviving parents, so his estate will receive the distribution; and the distribution amount is between $1000-$5000. Also, the plan is terminating. All participants were 100% vested at termination or at death. NRA = Normal Retirement Age as defined by the plan. In addition, these participants were also in 401(k) plans sponsored by the same Plan Sponsors as the defined benefit plans. Does your answer to any scenario change depending on the plan type? I think the answer for all four scenarios for both plan types is: No, none of these non-designated beneficiaries can elect to direct transfer their distributions to an Inherited IRA. If I'm reading the Inherited IRA rules and plan document correctly, the reason none of these scenarios can result in a direct transfer to an Inherited IRA is because none of the beneficiaries were designated as beneficiaries by the Participants. However, I rarely need to handle distributions due to death, so I am seeking input from more knowledgeable retirement plan practitioners. Thank you for your help.
  2. My client received a 1099R for a distribution taken during 2019 from an Inherited IRA account. My client was the non-spouse beneficiary of this IRA and inherited it several years ago. The funds are held in an inherited IRA. My client is over age 59 1/2 (actually 61 yrs old). The 1099R is coded with a "1" in box 7. That seems wrong to me. If she is over 59 1/2, shouldn't it be a code "7" normal distribution so that the 10% early w/d penalty doesn't apply? Any guidance or advice is much appreciated. Thank you.
  3. A Client's wife inherited an IRA from her mother in 2017. The wife passed in 2020, so now the husband is the beneficiary of the Inherited IRA. Ignoring the waiving of RMDs for 2020 due to the virus, does the SECURE act now apply and does the husband have to take the full balance out within 10 years?
  4. We had an associate pass away with no designated beneficiary on file for the 401k. Per the order of succession in the plan document, the beneficiary is the associate's estate. The beneficiary of the estate is now wanting to transfer the money into an inherited IRA. Can the transfer to an inherited IRA occur because the beneficiary is an estate? If so, would it have to be setup in the name of the estate or can it be setup in the name of the beneficiary of the estate?
  5. IRA owner dies at age 64, beneficiary is his older brother, age 69-70; brother dies at age 73 (presume he was taking RMDs), his beneficiary is his wife, age 67. Does she treat the IRA the same as if it had originally belonged to her late husband or are there special rules because she is the second beneficiary of the same IRA? What are her options? Thanks!
  6. I have a deceased participant, no designated beneficiary, and no spouse/child/parent. We have been making RMD payments to the Estate for several years, and the participant’s brother is the executor (and plan trustee), so he gets the RMD checks and deposits to an estate account. I should probably say this is for a qualified retirement plan, not an IRA. The Plan is now terminating, so the financial advisor is looking to help him roll over the full balance , but is having trouble with what type of rollover account is acceptable (his own firm is questioning). Most literature indicates that non-spousal beneficiaries may only roll to inherited IRA. How does one establish an "inherited" IRA when no designated beneficiaries exist in the first place? Thanks for any input!
  7. Owner of IRA dies. He was over 70.5 and had started RMDs. His IRA is going to adult niece (age e55). Can she put the IRA into a trust? If she does, is the IRA still called an inherited IRA? Are the RMDs still calculated based on the niece’s age? Can a trust be the trustee of an IRA? Thanks!
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