non-spousal beneficiaries

[Guest koolkid]

A 401(k) plan participant is deceased and had directed his account to be divided between 9 beneficiaries. Four of the beneficiaries are minors. The guardian of the four minors has legal counsel urging him to rollover the funds to a Stretch IRA. I cannot find anything to support this action. Is this legal?

[QDROphile]

Why don't you ask to have the learned legal counsel brief the plan on the proposal?

[mbozek]

If the decedent divided the IRA up into separate shares on his death in the beneficary designation form and the guardian is properly appointed to direct the affairs of the minors property then there could be separate IRA accounts set up for each of the 4 minors. However the funds would have to be transferred by a trustee to trustee transfer not a rollover. Whether this transaction can be done is to be determined by counsel who will be compensated for hi/her advice.

[RTK]

It sounds like the account to be divided is a 401(k) plan account (and not an IRA). Since a distribution to a non-spouse beneficiary is not an eligible rollover distribution, I cannot see how the money could be rolled over or transferred to the IRA. Also, seconding mbozek's comment on guardians, make sure the guardian is the guardian of the minor's estate (responsible for the minor's property) and not the guardian of the minor's person (responsible for the care of the minor). They are often confused.