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socrateaser, Lawyer
Category: Tax
Satisfied Customers: 37830
Experience:  Retired (mostly)
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My wife died in January 2010. I am the beneficiary of her 403(b)

Customer Question

My wife died in January 2010. I am the beneficiary of her 403(b) account. Can the assetts be passed on to my son, secondary beneficiary? Can he put it in a new IRA in his name? What are the tax implications? Thanks
Submitted: 6 years ago.
Category: Tax
Expert:  socrateaser replied 6 years ago.

You can provide a qualified disclaimer to the plan administrator of the 403(b). This will make the contingent beneficiary, the beneficiary of the account, as if he were the primary beneficiary, and the primary beneficary will be treated as if he had predeceased the retirement account participant.


The account benefits will be taxable to the new beneficiary, to the extent that distributions are made. If the beneficiary is entitled under the employer's plan to rollover the account into an IRA, then that may defer tax liability.


Hope this helps.


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Customer: replied 6 years ago.
My son is almost 40 years old. If the money is rolled over into his new "inherited IRA" would he have to start taking the distribution beginning now or till he is 70.5 years of age? Would he be taxed before the money is put in the new IRA account? I am trying to figure out what is the better thing to do to save tax expenses. Seems to me the ideal situation to be in would be to have the money in his new "IRA inherited ac" from which the withdrawls are not due till he is 70.5 years old. Can that be done?
Expert:  socrateaser replied 6 years ago.

He would have to start taking MRDs immediately. There is no tax liability, if the account is treated as a "trustee-to-trustee" transfer, which means that it's not actually a new IRA, but rather the beneficiary of the account is treated as if he/she were the deceased participant.