Roth distributions are not subject to income tax because the contributions have already been taxed and the Roth designation says the earnings are tax free. Distributions from the Roth will be required when the participant passes away.
However, the 403(b) plan is a tax deferred account meaning that the contributions have not been taxed but the earnings will be taxed once distributed. The tax code does not allow for a rollover to a non-spouse beneficiary. However, it does provide some options outline below for account holder's who pass away in 2020 or later:
1. Your daughter is a non-spouse, eligible designated beneficiary and may
A. Take taxable distributions over 10 years or
B. Take taxable distributions over "the longer of their own life expectancy and the employee's remaining life expectancy"
2. You grandson is a non-spouse, designated beneficiary meaning that he can take taxable distributions over 10 years.
Further reading can be found at the IRS
