Beneficiary IRA rolled over to 401(k) rollover


D

drace1

I'm 68 years old and have a work related 401(k) rollover brokerage
account. I'd like to transfer my deceased spouses IRA to that account
without penality. The account is with a different brokerage firm and
I am the soul beneficiary. The account is titled:
MY NAME BENE
MY WIFE'S NAME DCD IRA CNDT
I don't know what the CNDT stands for. She has been deceased for more
than 5 years.

If I can do this, should I have her brokerage firm send me a check and
then I send it to my broker? or can I do a transfer between firms?

Thanks in advance for your advice.

Dave

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R

Ron Peterson

I'm 68 years old and have a work related 401(k) rollover brokerage
account.  I'd like to transfer my deceased spouses IRA to that account
without penality.  The account is with a different brokerage firm and
I am the soul beneficiary.  The account is titled:
MY NAME BENE
MY WIFE'S NAME DCD IRA CNDT
I don't know what the CNDT stands for.  She has been deceased for more
than 5 years.
If I can do this, should I have her brokerage firm send me a check and
then I send it to my broker? or can I do a transfer between firms?
IIRC, you can't transfer funds in a IRA to a 401(k). However, you can
transfer your spouse's IRA to your IRA.

--
Ron

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A

Andrew Koenig

If I can do this, should I have her brokerage firm send me a check and
then I send it to my broker? or can I do a transfer between firms?
From everything I've heard, you should *never* have a financial institution
send you a check from an IRA if you're intending to move it, because of the
risk that the transaction might be considered taxable. Instead, transfer
directly from one firm to the other.

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D

Dave Dodson

I'm 68 years old and have a work related 401(k) rollover brokerage
account.  I'd like to transfer my deceased spouses IRA to that account
without penality.  The account is with a different brokerage firm and
I am the soul beneficiary.  

If I can do this, should I have her brokerage firm send me a check and
then I send it to my broker? or can I do a transfer between firms?
See http://www.irs.gov/publications/p590/ch01.html#d0e3324 for IRS
instructions regarding inherited IRAs. As I read it, it is permissible
to transfer your deceased spouse's IRA to your own.

You can have your spouse's IRA custodian send you a check, which you
can deposit into your IRA within 60 days, but I think the easiest way
is to have your IRA custodian take care of the transfer.

Dave

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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
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which we respond. For all of the other tips and suggestions, see "FROM THE
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J

joetaxpayer

Ron said:
IIRC, you can't transfer funds in a IRA to a 401(k). However, you can
transfer your spouse's IRA to your IRA.
Afraid you are behind the code changes. It used to be you needed to keep
a 401(k) rollover to an IRA in a specially titled 'rollover' account if
you had any intention of putting it into a future 401(k). Now, employer
permitting, I am allowed to transfer any pre-tax IRA money I have into
my 401(k).
Why would one do this?
A) You can retire from the company at 55 and take withdrawals without
being subject to the 59-1/2 age rule or worrying about Sec(72t) math.
B) Having saved $50K in non-deductable IRA deposits, this is the chance
to convert it to Roth, and not be subject to taxes. If there's no
pre-tax IRA money to tax, the conversion is free. Wahoo!
C) The 401(k) has some low cost fund, or otherwise closed fund that
can't be gotten into otherwise.

But I don't think OP asked that. He said he has a "work related 401(k)
rollover brokerage account." That's ambiguous enough to me. Sounds like
he already rolled the 401(k) to an IRA, but just wants to combine
accounts. It also sounds like the deceased spouse account was retitled
as I warn people they must title a non-spousal inherited IRA. There may
have been a valid reason to do so, but that titling prevent the accounts
from getting combined, I believe. It also impacts the way RMDs are
calculated, I also believe.

You are right that one can transfer the spouses IRA into their name and
it's theirs, as if it always was. I just don't know if the current
scenario is undoable.
Joe

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D

Dave Dodson

From everything I've heard, you should *never* have a financial institution
send you a check from an IRA if you're intending to move it, because of the
risk that the transaction might be considered taxable.  Instead, transfer
directly from one firm to the other.
There is no danger of the transaction being taxable if you complete
the rollover within 60 days. The old custodian will send you a form
next January saying that you took a distribution. You enter that on
your tax return, e.g., on line 15a of the the Form 1040. Right next
to that, on line 15b, you report the taxable portion of that
distribution. If you completed the rollover within 60 days, the
taxable portion would be $0. Line 15b then is one of the lines that
enters into the adjusted gross income. Line 15a is not used anywhere
else that I am aware of.

I do think that a trustee-to-trustee transfer is the easiest way to
go, though.

Dave

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D

Default User

Dave said:
There is no danger of the transaction being taxable if you complete
the rollover within 60 days. The old custodian will send you a form
next January saying that you took a distribution. You enter that on
your tax return, e.g., on line 15a of the the Form 1040. Right next
to that, on line 15b, you report the taxable portion of that
distribution.
I do think that a trustee-to-trustee transfer is the easiest way to
go, though.
Sometimes you don't have a choice. My 401(k) won't send a rollover to
another institution, but insists on sending a check to the address of
record. They cite security reasons.

An important thing to do if you do receive a check is to make sure the
sending custodian processes it as a rollover. That way taxes won't be
withheld. The check should be made out the receiving custodian, with
for-benefit-of designation in your name.




Brian

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D

Dave Dodson

Sometimes you don't have a choice. My 401(k) won't send a rollover to
another institution, but insists on sending a check to the address of
record. They cite security reasons.
We were talking about IRA to IRA rollovers, not a 401(k) to IRA
rollover. Do you know of an IRA that refuses to do a trustee-to-
trustee transfer?

Dave

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D

Douglas Johnson

Dave Dodson said:
There is no danger of the transaction being taxable if you complete
the rollover within 60 days.
But if the check is made to you, the old trustee is required to withhold 20% for
taxes. That means you have to come up with the cash to cover that 20% to
deposit into the new account. One of Congress's nicer FY rules.

The check must be made out as <new trustee> "for the benefit of" <your name>.

-- Doug

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D

Dave Dodson

But if the check is made to you, the old trustee is required to withhold 20% for
taxes.  That means you have to come up with the cash to cover that 20% to
deposit into the new account.  
We are talking about IRA to IRA transfers. This withholding rule you
mention is for distributions to you from a 401(k), not distributions
to you from an IRA. There is no withholding rule for distributions
from an IRA. You can have your old IRA custodian send you a check,
made out to you if you wish, for the entire balance of your account.
You can deposit that check into your checking account, and then,
before 60 days have passed, send a new check to your new IRA custodian
to fund a new account or add to an old one.

I'm finding so much misinformation in this thread. It is true that the
rules are convoluted, but that just means that you have to be careful
to understand them.

Dave

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D

Douglas Johnson

We are talking about IRA to IRA transfers. This withholding rule you
mention is for distributions to you from a 401(k), not distributions
to you from an IRA.
You're right. Sorry.
-- Doug

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J

joetaxpayer

Douglas said:
You're right. Sorry.
-- Doug
I believe we are lest with the question of whether the OP can mingle an
IRA he has already titled as a beneficiary IRA (from his spouse,
although his post appears to say he did not opt to simply change the
account or transfer it into his own name as he is permitted) back to the
regular 'owned' status after the fact. First I've run into this, and
can't find a reference.

Joe

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H

HW \Skip\ Weldon

I'm finding so much misinformation in this thread. It is true that the
rules are convoluted, but that just means that you have to be careful
to understand them.
One of the good things about this newsgroup is that while each of us
make mistakes occasionally, there is enough expertise hereabouts that
ultimately all questions get answered.

Heaven knows I've made my share of gaffs, and in every instance I've
noticed that there was no end to the number of posters who were more
than willing to point out my ignorance. <grin>


-HW "Skip" Weldon
Columbia, SC

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