Who can rollover the proceeds of the 401k?
A participant and their surviving spouse can rollover to an IRA, a non-spouse beneficiary cannot rollover to an IRA. I.R.C. 402(c)(9); Treas. Reg. 1.402(c)-2. Q: I would like to know the tax consequences of the distribution of my 401(k) upon my death if my adult son is designated as the beneficiary. Does he have to take the entire amount as a lump-sum distribution, or can he take the payout over a five-year period? If a trust is designated as the beneficiary, what are the tax rules? A: Prior to the Pension Reform act of 2006: Beneficiaries usually may withdraw the entire 401(k) in a lump sum if they choose, says Internal Revenue Service spokesman Jesse Weller according to Arthur M. Louis. If they prefer installments, there are generally minimum amounts that must be withdrawn. It’s extremely important to follow the rules, because there is a 50 percent penalty tax applied to any amount that should be distributed in a given year but isn’t. If you start receiving required, periodic distrib
A participant and their surviving spouse can rollover to an IRA, a non-spouse beneficiary cannot rollover to an IRA. I.R.C. §402(c)(9); Treas. Reg. §1.402(c)-2. Q: I would like to know the tax consequences of the distribution of my 401(k) upon my death if my adult son is designated as the beneficiary. Does he have to take the entire amount as a lump-sum distribution, or can he take the payout over a five-year period? If a trust is designated as the beneficiary, what are the tax rules? A: Prior to the Pension Reform act of 2006: Beneficiaries usually may withdraw the entire 401(k) in a lump sum if they choose, says Internal Revenue Service spokesman Jesse Weller according to Arthur M. Louis. If they prefer installments, there are generally minimum amounts that must be withdrawn. It’s extremely important to follow the rules, because there is a 50 percent penalty tax applied to any amount that should be distributed in a given year but isn’t. If you start receiving required, periodic distr
