Imperative Q&A’s involving Transfers, Rollovers, and Beneficiaries

By Beverly DeVeny
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This week’s Slott Report Mailbag looks into indirect and direct transfers, 60-day rollovers, trusts as a beneficiary, and 403(b)’s. As always, we recommend you work with a competent, educated financial advisor to keep your retirement nest egg safe and secure. You can find one in your area here.

Question:

Hello,

I am a public TV subscriber and purchased the Roadmap package.  If possible, can you inform me whether a lump sum pension payout that was paid via check to my Etrade IRA (FBO me) is considered an indirect transfer that prevents me from doing another direct transfer within the next 12 months?

Thank you. – Bob

Answer:

You can do as many direct transfers in one year as you wish. There are no restrictions on direct transfers. The only restriction on moving retirement funds is on IRA-to-IRA or Roth IRA-to-Roth IRA 60-day rollovers. A 60-day rollover occurs when the check for the distribution is made payable to you, not to the company holding the IRA account. You have the ability to cash the rollover check, since it is payable to you, and use those funds for anything you want during the 60 days. The IRA or Roth IRA 60-day rollover is limited to one per year, per individual – not per account. For this purpose, IRA and Roth IRA accounts are combined so you can do only one 60-day rollover.

Question:

Hello,

I am aware of the ability to name a trust as a beneficiary for a child under the age of 18 for an IRA account and still be able to stretch the distributions for the child as long as the proper language is used in the trust. Does the same apply to the beneficiary of a 403(b) account? In other words, can the required distributions for a 403(b) account be stretched for a minor beneficiary through a trust and if so, is the same language as an IRA used? Thank you.

– Steve

Answer:

The tax code allows for a trust to be the beneficiary of employer plan funds. But, an employer plan is not required to recognize a trust beneficiary. You will need to check with your employer or with the 403(b) company to see if you can use a trust as the beneficiary of your account. And, yes, the language that is needed in the trust for an IRA is also necessary for a trust that will be the beneficiary of employer plan funds.

 

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