Inherited IRA

[NJ Mike]

I have a plan in which a participant (Owner) passed away 10 years ago.  She was receiving RMDs from the plan.  The beneficiaries are her son (employee) and daughter (non-employee).  They each have been receiving RMDs every year from the plan.  The distributions started by 12/31 of the year following the mom's death.  Daughter now wants to transfer her portion of the remaining account balance to an inherited IRA.  Is this possible?  I looked over Notice 2007-7 as well as other regulations and my thought is yes but getting disagreement in the office here.  RMDs would have to continue under the IRA as they now do in the plan.   

Thanks for the help.

Mike

[Bird]

I say yes

[Luke Bailey]

NJ Mike, what reason are they giving for saying "no?" Maybe they are confused regarding the rule that in order for the 5-year rule not to apply, the life expectancy method must be commenced by the end of the year following death, or the direct transfer to IRA (misleadingly aka, "nonspouse rollover") must be done by end of year following death. But I think that if the life expectancy rule was properly commenced within the plan by end of year following death, then you could transfer later to IRA and be OK.

[NJ Mike]

Luke -  I think you hit the nail on the head.   They (now only one person) are confused by the reason you gave.   Thanks for your response.  Mike