76 years old beneficiary inherited 54 years-old-son 403b fund. Beneficiary does not have any retirement account , her income is below 2000 /year, and isn't receiving Social Security or Medicaid benefits.
First I am sorry for the loss for the beneficiary's son. Because the son was not required to take distributions due to his age there are a couple options available to the non-spouse beneficiary. I am assuming that the inherited funds are still with the 403b provider. Therefore, the first thing to do is contact the provider and let them know of the son's passing. They will send a packet explaining the options under the plan for distribution as well as the items they will need such as a death certificate.
Sometimes the options inside the 403b can be more restrictive than those of a inherited IRA due to the specific plan provider. If that is the case the beneficiary may want to consider doing a direct rollover to an inherited IRA. They can contact the institution of their choice to begin this process of setting up the account so that they will have the instructions for the 403b provider to do the direct rollover. The direct rollover will help the beneficiary avoid taxes from the movement of funds from the 403b to the inherited IRA. Care should be taken to determine that the inherited IRA is suited to the beneficiaries needs. Low cost investment options suited to the income needs and risk tolerance of the beneficiary should be part of the discovery process.
Here are the options for withdrawal: (1) The entire amount must be taken by December 31st of the fifth year following the son's death (the 5-year rule), or (2) over the life expectancy of the beneficiary (using IRS RMD life expectancy tables) within one year of the son's passing (the lifetime payment rule.) If the beneficiary wishes to use the second option it is extremely important that they begin that option prior to December 31st of the year following the son's passing. If they fail to begin distributions under this option by that date they will then have to take all of the amount within 5 years under option 1. The needs of the beneficiary will dictate which option is best. I hope this helps.