beneficiary 403b rollover
L1: beneficiary 403b rolloverClient has a beneficiary (sometimes called inherited) 403b annuity account. Her father”s living trust was the 403 benef, and she is the trustee. Now the account is owned by her as trustee of the benficiary 403b, but the annuity company will not let her change the account”s beneficiary to anyone other than the trust. Canthis beneficiary 403b be rolled over to a beneficiary IRA and then a new account beneficiary named?
Thanks2008-04-21 09:01, By: Eric, IP: [126.96.36.199]
L2: beneficiary 403b rolloverTHIS IS NOT A LEGAL OPINION. THERFORE, FIND A QUALIFIED ESTATE PLANNING ATTORNEY FOR FINAL ADVICE AND GUIDANCE.
However, I believe what you will find is the following. Since the father named his trust as the beneficiary, then the trust will remain the beneficiary of the 403(b) and distributions will be in accordance with the terms of the trust. Haveher estate planning attorney advise her what options she has as far as removing assets from the trust or changing the investments of the trust and other terms and conditions of the trust. I believe she will also discover that since the grantor of the trust has died, what once was a “revocable trust” is now “irrevocable” which greatly limits options.
ONCE AGAIN, THIS IS NOT LEGAL ADICE SO FIND A QUALIFIED ESTATE PLANNING ATTORNEY FOR QUALIFIED ADVICE AND GUIDANCE.Jim2008-04-21 11:44, By: Jim, IP: [188.8.131.52]
L2: beneficiary 403b rolloverI agree with Jim here.
IRS Notice 2007-7 clarified the non spouse beneficiary rollover provision of the PPA as pasted below:
Q-16. If the named beneficiary of a decedent is a trust, is a plan permitted to
make a direct rollover to an IRA established with the trust as beneficiary?
A-16. Yes. A plan may make a direct rollover to an IRA on behalf of a trust
where the trust is the named beneficiary of a decedent, provided the beneficiaries of the
trust meet the requirements to be designated beneficiaries within the meaning of
401(a)(9)(E). The IRA must be established in accordance with the rules in Q&A-13 of
this notice, with the trust identified as the beneficiary. In such a case, the beneficiaries
of the trust are treated as having been designated as beneficiaries of the decedent for
purposes of determining the distribution period under 401(a)(9), if the trust meets the
requirements set forth in 1.401(a)(9)-4, Q&A-5, with respect to the IRA.>>>>>>>> >>>>>>>>>>>>>
What this means is that if the trust is qualified for look through treatment, the inherited IRA transfer (must be direct transfer) will preserve the stretch in cases where it might be lost if the employer plan retained the funds. However, 2007-7 also indicated that the transfer is not obligatory for the plan, so it may refuse. Meanwhile, even if the transfer is completed, the beneficiary is STILL the trust, which validates the trustor”s purpose for naming a trust as beneficiary in the first place. Usually, they want some form of control over access to the funds by the beneficiary. Likewise, the trust will usually specify the successor beneficiaries and/or what conditions will permit the termination of the trust. If the trust is allowed to terminate, only then can the IRA or 403b funds be assigned directly to the trust beneficiaries. A trust attorney will likely be needed to handle trust termination including all the waivers required by the probate court.2008-04-21 16:58, By: Alan S., IP: [184.108.40.206]
L2: beneficiary 403b rolloverThanks!2008-04-22 10:22, By: Eric, IP: [220.127.116.11]