How to get funds from unwilling Co. to an inherited IRA??
IRA owner dies leaves IRA to two kids. Company is giving two options only, A – leave with them under 5 Year plan or B – lump sum to bene. I understand that the rollover does not apply to non-spouse bene’s, but can they have the check made to new trustee?
Permalink Submitted by Denise Appleby on Wed, 2007-09-12 20:28
The trustee/custodian can refuse to issue the check as a trustee-to-trustee transfer, unless that have an acceptance letter from the receiving custodian/trustee.
My suggestion…split the assets into two accounts at the current firm.
Then you submit for ACAT transfers. Under ACAT rules, they are required to honor the transfer request- if it is in good order- or they can be fined. NASD rules …. I hope your firm is ACAT eligible. If not, you are subject to NON-ACAT rules, which are not as strict . nor closely monitored.
If the account is not split, you can’t do an ACAT
Permalink Submitted by Toby H on Wed, 2007-09-12 20:48
sorry for confusion. Current trustee/custodian is an Insurance Carrier. They will not re-title the accounts to beneficiary IRA’s. Only send check to bene or hold in current account under 5 year deal. Each of the two bene’s are trying to get transferred to Inherited IRA’s. But from what I see they don’t have the 60 day rule, what I am wondering is – is there a way to get the check made to new custodian or something if the current one is unwilling to re-title as inherited IRA?
Permalink Submitted by Denise Appleby on Thu, 2007-09-13 15:18
No apologies necessary. Your post was quite clear. My response was not as such.
Usually, when an IRA owner dies, and there is more than one beneficiary, the custodian/trustee may either move the assets to separate inherited IRAs for the beneficiaries –for recordkeeping and tax reporting purposes. Others keep the assets in the same account, and are able to perform the necessary recordkeeping and tax reporting for each beneficiaries through sub-accounting. Just some background information…
Let’s start over…
In response to your question
[quote=”[email protected]“] can they have the check made to new trustee?[/quote]
They could. However, that would work only if the current custodian/trustee treats the transaction as a [url=http://www.retirementdictionary.com/Transfer.htm%5Dtrustee-to-trustee transfer[/url] (non-reportable), and the receiving trustee/custodian does the same. [i](Note that the fact that the check is made payable to the current custodian does not necessary mean that it was treated as a transfer )[/i] Usually, the current custodian would treat the transaction as a non-reportable [url=http://www.retirementdictionary.com/Transfer.htm%5Dtrustee-to-trustee transfer[/url] if they have an acceptance letter from the receiving custodian/trustee. If you choose this option, it must be made clear to the current trustee/custodian that the transaction is not a [url=http://www.retirementdictionary.com/Distribution.htm%5Ddistribution%5B/url%5D
The best way to initiate a trustee-to-trustee transfer is to have the request submitted by the receiving trustee/custodian. You would first establish the [url=http://www.retirementdictionary.com/Inherited-IRA.htm%5Dinherited IRA[/url] with your firm, then have the [url=http://www.retirementdictionary.com/Beneficiary.htm%5Dbeneficiaries%5B/url%5Dc… transfer requests. Your back-office should have procedures in place on how to handle the transfer request.
If the current custodian says they cannot allow the transfers, ask them to show you where it is written in the contract that the transfer is not permitted. Explain to them that NASD rules require them to honor a transfer request, unless the request is not in good order.
Please let us know if you have any follow-up questions.
Most importantly, if you get the same response when you contact the custodian, ask to speak with a supervisor.