Transfer of Defined Benefit Plan (DBP) by Surviving Spouse to a Solo 401k

Yes a Defined Benefit Plan can be transferred by the surviving spouse to a solo 401k plan in addition to an IRA. You have EGTRRA and the Pension Protection Act of 2006 (PPA)  to thank for this, as these pieces of legislature changed the rules for spousal rollovers of QRP distributions and a defined benefit plan falls under the QRP category.

If a surviving spouse beneficiary of an employee receives an eligible rollover distribution from a plan, the rollover rules apply as if the surviving spouse were the employee, with no restrictions. Consequently, the surviving spouse may roll over the assets to an IRA or another eligible employer-sponsored retirement plan such as a self-employed solo 401k plan. Before 2002, only an IRA could serve as the receiving plan.

Lastly, don’t confuse the surviving spouse beneficiary transfer rules with the non-spouse beneficiary rules, as only the option to transfer the inherited defined benefit plan (DBP) to your own IRA or solo 401k plan applies to spouse beneficiaries. Non-spouse beneficiaries cannot transfer inherited qualified plans such as a defined benefit plan, 401(k), or even an inherited IRA to a solo 401k plan. Instead, the non-spouse beneficiary can transfer the DBP or other types of qualified plans to a beneficiary IRA.

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About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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