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Question: My client has inherited both a 403(b) account and a 457(b) account from her late father. Can the inherited 457 account be transferred into the inherited 403(b) account?
Here’s an excerpt from Code Section 402(c), which explains that it’s possible for a non-spouse beneficiary to make a trustee-to-trustee transfer of an inherited qualified plan account to an inherited IRA. However, nothing in that Code Section, nor anywhere else in the Code, permits the transfer of an inherited qualified plan account to an inherited 403(b).
(11) Distributions to inherited individual retirement plan of nonspouse beneficiary
(A) In general
If, with respect to any portion of a distribution from an eligible retirement plan … of a deceased employee, a direct trustee-to-trustee transfer is made to an individual retirement plan … established for the purposes of receiving the distribution on behalf of an individual who is a designated beneficiary … of the employee and who is not the surviving spouse of the employee—
(i) the transfer shall be treated as an eligible rollover distribution,
(ii) the individual retirement plan shall be treated as an inherited individual retirement account or individual retirement annuity ….
If the inherited qualified account is transferred to an inherited IRA, the RMD requirements for the inherited IRA will be the same as those for the inherited qualified account.
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