By Andy Ives, CFP®, AIF®
How can the beneficiaries of an estate roll a 401(k) paid to the estate to a Roth IRA? What steps must be taken?
Inherited IRAs cannot be converted to inherited Roth IRAs, but inherited 401(k) plans can be converted. This is an anomaly in the rules, but it is allowed. However, if the 401(k) was already paid to the estate, those former plan dollars cannot be rolled back to a traditional IRA or converted. Non-spouse beneficiaries cannot do 60-day rollovers with inherited IRA or plan dollars. Once they are paid out (in this case, to the estate), they must remain paid out and are taxable.
I have recently heard that the government may change the RMD age to 75 from the present 72. Is there any truth to that?
There is proposed legislation in Congress that would gradually raise the RMD age from 72 to 75. As with all legislation, there are suggestions and negotiation before anything becomes law. Many of today’s rumors begin when people read “proposals” and confuse them for final policies. While rumors abound, it is important to focus on the current rules Yes, there are RMD age proposals, but the current RMD age is 72. If there are any authoritative changes, rest assured it will be big news and we will clearly write about it.
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