401K Spouse Rollover Options for Deceased Spouse
  • Liz Becerra, Financial GPS CRO

401K Spouse Rollover Options for Deceased Spouse


It's not an easy topic to talk about, but we need to be prepared for things like this. If your spouse has a 401K and passes away, you as the spouse beneficiary need to know what your options are. That's what we're going to discuss today; the 401K Spouse Rollover Option.

When a 401K Participant passes away, their beneficiary becomes entitled to the money left behind. Now a spouse who is the 401(k) beneficiary has options that aren't available to other beneficiaries. A spouse can roll the inherited 401(k) money over to their own tax-deferred IRA and avoid any taxes and penalties. Other beneficiaries however don’t have this option. This means that kids, grandkids and other family members can't roll over their assets to their IRA.

Now, let's say for example your spouse was 70 1/2 years old and began taking their required minimum distributions before they passed away. As the spouse beneficiary, your decision to rollover the money to my IRA will halt the required minimum distributions until you turn 70 1/2 years old.

Now let's say your spouse's 401K plan permits extended payouts. As the spouse beneficiary you have the option to leave the money in the 401(k) until the year your spouse would have turned 70½.

All in all, the surviving spouse can typically roll the money into an IRA if they want. They can also choose to leave the funds in place for later, take the money in a lump-sum payment or withdraw it over five years.

And that's it! That's the 401K Spouse Rollover Option. Check out our blog, "What is a 401K Required Minimum Distribution and how do I handle it?"

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