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I inherited a 401(k) from my ex-husband. He was 45 years old when he passed away and I'm the same age. She is the same age. What are my options?


The BIDaWIZ Team's Answer:

As a former spouse that is a non-spouse beneficiary § 401(a)(9)(E), you may have three options: 1) leave the money in the 401(k) account as is, 2. transfer the money to an inherited IRA, or 3. withdraw the funds. For the first two options, the beneficiary must determine whether to 1) take a minimum distribution, which may be required to begin in the year following the original account holder's death and continue each year thereafter or 2) defer distributions until a later date, but then the account must be fully distributed by December 31 of the fifth anniversary of the original account holder's death. It's important to note though that with 401(k) accounts, most trustees will require that you either take an immediate distribution or rollover to an inherited IRA. Of the two options, the inherited IRA rollover option provides the most flexibility. The last option or the immediate distribution provides the least tax benefits

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