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Non-spouse beneficiary rollover reminder

  • Non-spouse designated beneficiaries must be offered the option to directly roll over an eligible rollover distribution. The rollover has to be made to an inherited IRA established to receive the benefits on behalf of the designated beneficiary. A non-spouse beneficiary cannot roll over the account assets to his or her own IRA.
  • Non-spouse rollovers are considered eligible rollover distributions and are generally subject to the same rules as other eligible rollover distributions. Consequently, plan sponsors have to provide non-spouse beneficiaries with a Section 402(f) notice. This notice explains the choices for receiving the distribution and outlines the tax effects of each choice.
  • Funds paid to the non-spouse beneficiary are subject to mandatory 20% federal income tax withholding.
Source: NPI 2010

This information should not be considered tax or legal advice. GuideStone stands ready to assist your organization as you work with your legal and tax advisers by providing resource information that you and your adviser may find beneficial.

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