Nonspouse Beneficiary Drirect Rollover

[DTH]

The participant was taking MRDs when he died. Can a nonspouse directly rollover the death benefit to an Inherited IRA after the MRD is taken for the year?

Example 1: Participant dies in 2006 and took his MRD for the 2006 distribution calendar year. In 2007 the nonspouse is due an MRD. Can the nonspouse directly rollover to an inherited IRA after taking the 2007 MRD?

Example 2: Participant dies in 2006 and took his MRD for the 2006 distribution calendar year. In 2007 the nonspouse takes the 2007 MRD. In 2008 can the nonspouse directly rollover to an inherited IRA after taking the 2008 MRD?

Thanks

[J Simmons]

My understanding is that both Examples 1 and 2 are allowable, provided the QRP (qualified retirement plan) is amended to permit the nonspouse beneficiary to have a direct rollover. RMDs from the IRA, for years after the rollover, would have to be based on the same life expectancy (the employee's or the nonspouse beneficiary's) as were the RMDs from the QRP.

[DTH]

Under this scenario, once the QRP assets are moved to the inherited IRA, can the nonspouse beneficiary elect the 5-Year Rule or the Life Expectancy Rule or are they stuck with the Life Expectancy Rule?

[masteff]

Under this scenario, once the QRP assets are moved to the inherited IRA, can the nonspouse beneficiary elect the 5-Year Rule or the Life Expectancy Rule or are they stuck with the Life Expectancy Rule?

No, because in your original post you stated the participant was already in MRD's at time of death, so the payments must continue under Life Expectancy.