A:

Unfortunately, a non-spouse beneficiary is not allowed to rollover assets from a qualified plan. Therefore, purchasing an annuity appears to be the only option for a beneficiary who wants to stretch out payments over an extended period, while preserving the tax-deferred status of the assets. You may refer to Private Letter Ruling (PLR) 200244023 for an IRS ruling on a similar matter.



Of course, the beneficiary should follow the advice of his or her tax professional.



This question was answered by Denise Appleby
(
Contact Denise)



RELATED FAQS
  1. Can an IRA beneficiary roll the IRA over into another account and designate another ...

    It depends on the provision of the IRA plan document. Some (though very few) do not allow the designation of successor beneficiaries. ... Read Answer >>
  2. I've heard that workers who don't roll over their 401(k)s after retiring face some ...

    I am not sure to which government regulation your contact was referring. However, here is what I can tell you. In 2002, the ... Read Answer >>
  3. Can 529 plans be used to transfer wealth to other family members if the original ...

    Yes, the 529 plan (also known as a "qualified tuition program") allows you to distribute and roll over funds from one 529 ... Read Answer >>
  4. I failed to distribute an inherited 401(k) that was found in an audit. What happens ...

    The party responsible for paying the penalty in such cases will be the beneficiary of the 401(k) plan. You may want to start ... Read Answer >>
Related Articles
  1. Retirement

    Wealth-Building IRA Rollovers

    Rollovers allow your tax-deferred retirement assets to grow, even when the world around you is changing.
  2. Financial Advisor

    Inherited IRA and 401(k) Rules: Don't Run Afoul

    What you need to know when it comes to the complex rules for inherited IRAs and 401(k)s.
  3. Retirement

    Mistakes In Designating A Retirement Beneficiary

    Make sure your beneficiary designations not only reflect your intentions but also meet the requirements to be effective.
  4. Retirement

    3 Deadlines For Retirement Plan Beneficiaries

    To take full advantage of new RMD regulations, beneficiaries need to take action before important deadlines.
  5. Retirement

    A Look At IRA Separate Accounting Rules

    If you are a younger multiple beneficiary, make sure you understand the RMD regulations.
  6. Retirement

    An Estate Planning Must: Update Your Beneficiaries

    Life changes make it time to rewrite your plan's designations.
  7. Retirement

    Why You Need to Update Retirement Account Beneficiaries

    The designation of beneficiaries in retirement accounts takes precedence over a will. Don't forget to keep them updated.
  8. Financial Advisor

    3 Costly Retirement Account Mistakes to Avoid

    These are the most common pitfalls investors should try to avoid when it comes to retirement accounts.
  9. Financial Advisor

    Top Estate Planning Tips for 401(k)s and IRAs

    Here's how to avoid estate planning pitfalls when it comes to leaving IRA and 401(k) assets to heirs.
RELATED TERMS
  1. Non-Spouse Beneficiary Rollover

    A retirement plan asset rollover performed in the event of the ...
  2. Primary Beneficiary

    A beneficiary in a will, trust or insurance policy that is first ...
  3. Named Beneficiary

    This term refers to any beneficiary named in a will, a trust, ...
  4. Secondary Beneficiary

    A person or entity that inherits assets under a will, trust or ...
  5. Alternate Beneficiary

    In a will, an alternate beneficiary is usually named in case ...
  6. Inherited IRA

    An individual retirement account that is left to a beneficiary ...
Hot Definitions
  1. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  2. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  3. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  4. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the ...
  5. Border Adjustment Tax

    A tax levied on goods based on where they are sold – exported goods are exempt from tax; those imported and sold in the ...
  6. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
Trading Center