The IRS has issued guidance on a new-for-2007 choice for nonspouse beneficiaries of an inherited qualified plan account. These beneficiaries may be able to transfer part (or all) of the deceased employee's account balance into an inherited IRA. Under the new guidance, a nonspouse beneficiary can, in most situations, receive payouts from the inherited IRA over his or her lifetime. This can make an inherited IRA a powerful tax-deferral tool, but expert help is a must to assure that key rules are met (such as when distributions from the inherited IRA must begin). The one downside is that under the IRS's latest guidance, company retirement plans may, but are not required to, offer the rollover option for nonspouse beneficiaries.  Prior to 2007, this tax-deferral tool was only available to spouse beneficiaries.

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