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options for designated survivors
Old 06-20-2013, 07:32 PM   #1
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options for designated survivors

If at the time one passes, are the options of how your designated survivor takes the money the same for 401k, Trad IRAs, Roth IRAs. Ex: you die leave 401k to significant other does the proceeds need to be cashed out, pay taxes and then reinvested in taxable account, can or does it need to be rolled over to another 401k or Trad IRA. Same if it is a Trad IRA or Roth IRA. What are options or limitations.

i.e. i die what options does my significant other have w/ my 401k, ira, etc.

Thanks
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Old 06-20-2013, 08:36 PM   #2
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The proceeds do not need to be cashed out. I believe for spouses things will remain much like they were with both spouses living. For non-spouses inheriting retirement accounts there will be RMD requirements, but different than when the couple were living. Taxes are roughly the same, taxed as income for traditional and no tax for Roth, but now it's the inheritor that has the RMD and tax problem with traditional IRA's. Other than for spouses, inherited IRA's need to be titled carefully to preserve the best RMD characteristics. And that's about the limit of my "knowledge".
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Old 06-25-2013, 09:47 AM   #3
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My spouse died unexpectedly about a year ago at 46 years old - each of us had a ROTH, as well as a rollover IRA. Both of those simply rolled from her accounts into mine, no taxes or any other issues involved.

And there's the extent of my knowledge

- John
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Old 06-25-2013, 09:56 AM   #4
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Quote:
Originally Posted by runchman View Post
My spouse died unexpectedly about a year ago at 46 years old - each of us had a ROTH, as well as a rollover IRA. Both of those simply rolled from her accounts into mine, no taxes or any other issues involved.

And there's the extent of my knowledge

- John
So so sorry. Really heloful of you to share the roll-over process information.
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Old 06-25-2013, 10:24 AM   #5
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Thanks, it's been an experience for sure. Definitely glad I'd gotten both of us term life insurance 17 years ago when our first daughter was born.

I never expected to be 'using' hers, but getting that $200k check in the mail and being able to payoff the mortgage made it possible for me to ER on SS survivor benefits and be around for my 2 daughters all the time.

Moral of the story - don't put off that insurance! It doesn't always happen to someone else, sometimes it's actually YOU.

- John
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