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Beneficiary Options

Q: My client, age 52, died in February. Her two sons, ages 18 and 21, are her 401(k) beneficiaries. The plan does not offer life expectancy payouts to the sons. They also are beneficiaries of their mother’s pension, and have been notified of their right to directly roll over the lump sum to an inherited IRA. What are their options?

A: Each one of sons can directly roll over his share of the 401(k) to an inherited IRA (renamed to "Son's name, as beneficiary of Mom's name, deceased"), where they must take distributions over each son's life expectancy, with the first one due no later than Dec. 31, 2017 (the year following the year of their mother's death). Each son also can directly roll over his share of her lump sum pension benefit to a separate inherited IRA for each, beginning life expectancy distributions by Dec. 31 of the year following the year of death.

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