I have a question about a 401k account from my recently deceased father that I am a beneficiary on. Am I able to roll that into my self-directed solo 401k trust?
ANSWER:
Good question, and the quick answer is no. Unfortunately, the IRS regulations do not allow for the rollover/transfer of a 401k or an IRA that is inherited from anyone other than a spouse to your own IRA or 401k including a solo 401k plan. Instead, the following options are available to a non-spouse 401k beneficiary.
In 2020 and later, options for a beneficiary who is not the spouse of the deceased account owner depend on whether they are an “eligible designated beneficiary.” An eligible designated beneficiary is
- Spouse or minor child of the deceased account holder
- Disabled or chronically ill individual
- Individual who is not more than 10 years younger than the IRA owner or plan participant
An eligible designated beneficiary may
- Take distributions over the longer of their own life expectancy and the employee’s remaining life expectancy, or
- Follow the 10-year rule (if the account owner died before that owner’s required beginning date)
Designated beneficiary (not an eligible designated beneficiary)
- Follow the 10-year rule
Beneficiary that is not an individual
- Follow the rules described above as if the account owner died before 2020 (because the SECURE Act changes only apply to beneficiaries who are individuals)
The Rules are More Favorable for Spouse Beneficiary
Essentially, the spouse of the 401k account owner has more options than non-spouse beneficiaries when the spouse is the sole beneficiary of the account.
Spousal beneficiary options
If the account holder’s death occurred prior to the required beginning date, the spouse beneficiary may:
- Keep as an inherited account
- Delay beginning distributions until the employee would have turned 72
- Take distributions based on their own life expectancy
- Follow the 10-year rule
- Roll over the account into their own IRA
If the account holder’s death occurred after the required beginning date, the spouse beneficiary may:
- Keep as an inherited account
- Take distributions based on their own life expectancy, or
- Rollover the account into their own IRA
