Rollover by a surviving spouse

[Guest MAnglim]

The newly-released final rules on required minimum distributions state that a surviving spouse who is the sole beneficiary of a deceased spouse's 403(b)account may not treat the account as his or her own (see s. 1.403(B)-3, A-1.©(3)). (The rules are different for IRAs.) However, under EGTRRA, s. 402©(9) of the Code gives a surviving spouse the same rollover rights as the employee, i.e., a distribution from a 403(b)plan attributable to the deceased employee can be rolled over to any other eligible retirement plan, presumably in the spouse's own name.

How can the rule and the statute be reconciled?

[mbozek]

How about form over substance-- the IRS thinks of a 403(B) plan as an employer sponsored retirement plan for 501©(3) and public schools which is similar to a qualified plan. Since the spouse of a participant in a Qual plan cannot inherit the deceased ret. benefits it can't be done in a 403(B) plan for consistency reasons. However, the deceased's interest can be rolled over to an IRA or another 403(B)/qual plan in which the spouse is a participant. There is no logic to this IRS position.