My dad passed away a few months ago and had a 401K account with about $320K in it. My mom was under the assumption that she was the beneficiary of the account but, unbeknown to everyone, my dad changed the beneficiary at some point to be my sister.
Dad had a will but the named beneficiary of the 401K apparently trumps the will's content so my sister is now the owner of the account. The 401K was supposed to be money that would supplement my mom's pension and my sister wants to transfer it back to her.
Unfortunately, it appears that transferring a 401K to another person is not possible. If my sister were to cash it out and gift it to my mom, she'd have to first pay taxes plus a 10% penalty (sister is in her 20s). Is all this correct? At that point, would my mom be limited to sticking the money in a regular brokerage account? Are there any ways to make the transfer without losing so much to taxes/fees?
My mom has set up an appointment with a lawyer to discuss this but I wanted to get your feedback and ideas as well. Thanks!
Submitted February 27, 2018 at 12:32PM by NuclearMeltdown http://ift.tt/2GNNBZJ
