Can an IRA beneficiary roll the IRA over into another account and designate another beneficiary?

By Denise Appleby AAA
A:

It depends on the provision of the IRA plan document. Some (though very few) do not allow the designation of successor beneficiaries. The good news is that most do. If the beneficiary designates a successor (second generation) beneficiary, the successor beneficiary must continue distributions based on the first-generation beneficiary's life expectancy. An exception applies to a spouse beneficiary who elects to treat the IRA as his or her own; this spouse beneficiary would use the rules that apply to the IRA "owner" - not the beneficiary.

By the way, when you communicate with your financial institution regarding the matter, you may want to use the term transfer instead of rollover, just to make sure that the transaction is done properly. As you may know, once a beneficiary takes a distribution of inherited retirement (including IRA) assets, that amount cannot be rolled over unless the beneficiary is the spouse of the deceased retirement account owner. With a transfer, the assets are delivered directly to the financial institution for credit to the inherited IRA. The beneficiary must not take possession of the assets if he or she wants to keep them in an IRA.

To read more, check out Moving Plan Assets: How To Avoid Mistakes.


This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. What is a 401(k) rollover?

    Find out what a 401(k) rollover is, when you might want to roll over a 401(k) and whether a direct or indirect rollover is ...
  2. Are qualified pension plans taxable?

    The taxable portion of your pension or annuity payments is usually subject to federal income tax withholding, according to ...
  3. How do you withdraw money from your 401(k)?

    Deciding to take a withdraw from your 401k is not a decision that should be made lightly. However, for those who needs funds, ...
  4. Is it possible to obtain a loan from a qualified retirement plan?

    Read how loans are available for qualified retirement plans; most loans allow for $50,000 or 50% of the current vested value, ...
RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Gold IRA

    Definition of Gold IRA
  3. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  4. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
  5. Peri-Retirement

    A term for the period of time leading up to actual retirement. ...
  6. MyRA

    A new tax-advantaged retirement account that President Barack ...
comments powered by Disqus
Related Articles
  1. Top Financial Frights: Emergencies & ...
    Investing Basics

    Top Financial Frights: Emergencies & ...

  2. Steps To Retiring With A Reverse Mortgage
    Retirement

    Steps To Retiring With A Reverse Mortgage

  3. When Your Job Offers An Awful Retirement ...
    Retirement

    When Your Job Offers An Awful Retirement ...

  4. Top 5 Strategies To Pay For Elder Care
    Retirement

    Top 5 Strategies To Pay For Elder Care

  5. 5 Top Alternatives To A Reverse Mortgage
    Retirement

    5 Top Alternatives To A Reverse Mortgage

Trading Center