Beneficiary Employer K plan missed the deadlines

401(k) plan participant passes away in 2017. Elderly dad, age 85, is the beneficiary. Plan sponsor retitled the account in the dad’s name but, plan remains 401(k), not inherited IRA. Dad now has to comply with the five year rule for emptying the account.

Is the employer plan still eligible to rollover to and IRA?



Yes, a direct rollover to an inherited IRA can still be done, but if the 401k beneficiary provisions indicate the 5 year rule now applies, the inherited IRA will also be subject to the 5 year rule. Due to Dad’s age, his LE would only have added a couple years to the applicable distribution period. It should also be noted that the participant evidently passed prior to the RBD, and therefore Dad also cannot use the remaining life expectancy of the participant.



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