No Beneficiary? Oops!
Money may talk, but taxes scream for attention. Case in point: If the owner of a retirement plan account neglects to name a beneficiary, the plan will use its default rules, which typically make the owner’s estate the beneficiary. This requires both appropriate federal AND state taxes be withheld before issuing the lump sum to the estate. Not only can this be a costly mistake, it could have been completely avoided.
But there’s hope! Last May, the IRS released a private letter ruling (PLR) that allows a surviving spouse to execute a 60-day rollover of assets inherited from a company retirement plan, even though they were first paid to the decedent’s estate. (ED Slott’s July Newsletter)
While we hope this affects only a small percentage of you, the spousal rollover rulings are extremely important to be aware of. Tune in today to find out what your options are.