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Denise Appleby- Author, Speaker on IRAs & Employer Retirement Plans; Consultant, and Trainer of Choice for Financial and Tax Professionals
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Portability Options for Inherited Assets from Employer Plans, Traditional IRAs and Roth IRAs |
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To Traditional IRA |
To Roth IRA |
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Beneficiary |
Own |
Inherited |
Beneficiary |
Own |
Inherited |
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Employer Plan |
Spouse |
Yes |
Yes |
Spouse |
Yes |
Yes |
|
Nonspouse |
No |
Yes |
Nonspouse |
No |
Yes |
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Qualified trust |
No |
Yes |
Qualified trust |
No |
Yes |
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Nonperson |
No |
No |
Nonperson |
No |
No |
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Roth 401(k) and Roth 403(b)/ 457(b) Gov’t |
Spouse |
No |
No |
Spouse |
Yes |
Yes |
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Nonspouse |
No |
No |
Nonspouse |
No |
Yes |
|
|
Qualified trust |
No |
No |
Qualified trust |
No |
Yes |
|
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Nonperson |
No |
No |
Nonperson |
No |
No |
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Traditional IRA |
Spouse |
Yes |
Yes |
Spouse |
Yes[1] |
No |
|
Nonspouse |
No |
Yes |
Nonspouse |
No |
No |
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Qualified trust |
No |
Yes |
Qualified trust |
No |
No |
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Nonperson |
No |
Yes |
Nonperson |
No |
No |
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Roth IRA |
Spouse |
No |
No |
Spouse |
Yes |
Yes[2] |
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Nonspouse |
No |
No |
Nonspouse |
No |
Yes |
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Qualified trust |
No |
No |
Qualified trust |
No |
Yes |
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Nonperson |
No |
No |
Nonperson |
No |
Yes |
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PAGE 2 |
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To Employer Plan Account |
To Roth 401(k) & Roth 403(b)/457(b) Gov’t |
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Beneficiary |
Own |
Inherited |
Beneficiary |
Own |
Inherited |
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Employer Plan |
Spouse |
Yes[3] |
Yes [4] |
Spouse |
Yes 1 |
Yes 2, [5] |
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Nonspouse |
No |
Yes 2 |
Nonspouse |
No |
No |
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Qualified trust |
No |
Yes 2 |
Qualified trust |
No |
No |
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Nonperson |
No |
Yes 2 |
Nonperson |
No |
No |
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Roth 401(k) and Roth 403(b)/ 457(b) Gov’t |
Spouse |
No |
No |
Spouse |
Yes 1 |
Yes |
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Nonspouse |
No |
No |
Nonspouse |
No |
Yes |
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Qualified trust |
No |
No |
Qualified trust |
No |
Yes |
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Nonperson |
No |
No |
Nonperson |
No |
Yes |
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Traditional IRA |
Spouse |
Yes |
No |
Spouse |
No |
No |
|
Nonspouse |
No |
No |
Nonspouse |
No |
No |
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Qualified trust |
No |
No |
Qualified trust |
No |
No |
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Nonperson |
No |
No |
Nonperson |
No |
No |
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Roth IRA |
Spouse |
No |
No |
Spouse |
No |
No |
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Nonspouse |
No |
No |
Nonspouse |
No |
No |
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Qualified trust |
No |
No |
Qualified trust |
No |
No |
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Nonperson |
No |
No |
Nonperson |
No |
No |
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Notes:
- The categories of spouse, nonspouse, qualified trust, and nonperson, refers to the type of beneficiary
- For this purpose, an employer plan includes: a qualified retirement plan (401(a) and 403(a) plans), as well as, 403(b) and governmental 457(b) plans
- Reference to Traditional IRA includes SEP IRAs; and if any deposits have aged for at least two years, a SIMPLE IRA
- A SIMPLE IRA can only receive assets from another SIMPLE IRA
- Assets must be rollover eligible in order to be rolled over to the receiving retirement account. A RMD amount is not rollover eligible. After-tax amounts cannot be rolled over from an IRA to an employer plan
- Except for a spouse, a rollover from an employer plan to an inherited traditional or inherited Roth IRAs must be a direct rollover not a 60-day rollover
- Assets that are being moved from a decedent’s IRA to an Inherited IRA of a non spouse beneficiary must directly transferred trustee-to-trustee
- Except for after-tax balances, movement from a non-Roth account to a Roth account is treated as a taxable distribution
- A qualified trust is defined in Treasury Regulations Section 1.401(a)(9)-4, Q&A-5
[1] Treated as a Roth conversion (may be taxable). Spouse must first elect to treat the inherited traditional IRA as his or her own IRA( see Q&A for this is done)
[2] Verify that IRA agreement provides this option, and if not, the only option available to surviving spouse is to treat the Roth IRA as his or her own.
[3] Surviving spouse must be a participant in the receiving plan.
[4] Account must remain within the same employer’s plan that held the deceased participant’s assets.
[5] Plan must allow for an in-plan conversion.