Owner deceased-wife wants to rollover $

[Cynchbeast]

Owner of company is deceased; wife wants to rollover his money to her IRA. This is permissible, is it not? (Just double checking)

[Lou S.]

She is the beneficiary?

The payments wasn't in annuity status?

Owners wasn't past required beginning date for RMD?

In most cases, not a problem for spouse beneficiary to to roll to IRA.

[ETA Consulting LLC]

Please ensure that the surviving spouse understands that if she is not 59.5, then she would be effectively moving the assets FROM a vehicle that is exempted from the 10% penalty (due to death) INTO a vehicle that is not exempted.

Another option may be to simply roll in into an inherited IRA set up with her as the beneficiary (which effectively operates as her own IRA, but ensures she retains the exemption to the 10% penalty that she's entitles to).

I've seen this happen too many times in my career. Sometimes, they need someone to shed a little light so they can make informed decisions.

Good Luck!

[Lou S.]

That true. Sometimes an inherited IRA is better but other times rolling it to your own IRA is better. Every situation can be different.

An inherited IRA does retain the 10% penalty exception but treating it as your own sets up the RMDs on your own 70 1/2 schedule instead of the deceases spouse and gives the spouses beneficiaries more options. There are pros and cons to both.

[david rigby]

Does the sponsoring company survive? If not, is there a possibility that the plan document is automatically terminated? If the plan provisions include that requirement, that implies the spouse must take a distribution.

But check carefully.

[Cynchbeast]

Additional question: we are preparing package to send which normally includes full tax disclosure. Is the standard tax disclosure good when paying beneficiary? In other words, are the tax rules any different?