Notice 2007-7 Question

[jevd]

Here's one to ponder.

No Apparent Guidance on this.

A qp or 403(b) plan has a deceased participant who has a non-spouse beneficiary. The participant died 1998. Non-spouse beneficiary has been taking annuity style distributions from the plan in accordance with the one year rule.

The latest newsletter from the IRS says that a direct rollover from the qp or 403(b) must be accomplished before the end of the year following the year of death to be eligible for the annuity method.

However, what if those distributions were already being done from the qp? Can a direct rollover be accomplished and still retain the annuity rule? Also

what if the death was after RBD?

[John Feldt ERPA CPC QPA]

Unless I'm missing something, it looks to me like they can roll to an inherited IRA where the IRA is titled as mentioned in either Q&A-13 or Q&A-16, and based on your example, the payment method must continue on as is - it cannot be modified. So the only benefit might be a different array of investment options in the IRA.

I also think the plan can only do this if it is amended to allow non-spousal rollovers. The provision is voluntary (Q&A-14), so you will not have until 2009 to adopt an amendment if you want to apply this now.

I'd like to see other comments on this as well.

[Bird]

I agree. This can be rolled and systematic distributions continued from the IRA.