Inherited 403b to estate (no beneficiaries)
Hello! Need help –
My brother and I are fumbling through dispersing one part of my moms estate. She had a 403B at TIAA.
Not huge (99k) but we want to not fumble this and pay a huge hunk of taxes. Because the account did not have any beneficiaries the account has to be paid to the estate apparently.
What we really would like to do is to roll over the account (probably at Vanguard) designated for the estate. Then the account designates both of us as beneficiaries for the split of the funds. This avoids the one time huge tax hit. I have a great accountant for my business and this is his suggestion.
TIAA tells us that this account is an annuity is not eligible for “rollover” and it is only eligible for disbursement and in that option we pay a huge amount of taxes. But when we called them and asked for the plan provisions, or any other information, they are not willing to give that to us – something about not being able to get historical documents – and the phone rep was stammering something fierce. Then he said he could advise us on taxes and then he backpeadled on that. Really odd. The paperwork that TIAA sent us have says the paperwork cannot be changed and we can only “disburse” the amount.
If anyone has experience, suggestions on this and anything else for us that would be appreciated.
Permalink Submitted by David Mertz on Tue, 2019-03-26 01:10
Under the tax code, only a “designated beneficiary” can roll an inherited qualified retirement plan over to an inherited IRA, and can only do so by direct rollover. Only a individual (or a trust maintained for the benefit of one or more designated beneficiaries) can be a designated beneficiary. Since the estate, not an individual, was the beneficiary of the 403(b), TIAA was correct to distribute the entire balance to the estate and no rollover is possible. The estate will distribute this income to the estate beneficiaries for taxation on the estate beneficiaries’ tax returns.