The recent Pension Protection Act offers good news for the non-spouse beneficiary of a 401(k). It is now possible to arrange a trustee-to-trustee transfer of an inherited 401(k) to an inherited IRA. This is great news for the consumer, and represents a significant change from the old law.
The new law basically offers inherited 401(k)s the same tax treatment as inherited IRAs. The 401(k) owner should now make the decision to rollover or not to rollover based on investment reasons, not tax reasons.
401(k) Rollover Distribution Background
Under the old tax laws, leaving money in a 401(k) to an heir other than your spouse carried the potential for a tax nightmare. Rules governing 401(k)s vary according to a particular company’s plan documents. Often pla View the rest of this article
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