Beneficiary, IRA and the massive withdrawal to reinvest
First off I posted a question in another forum and then they have redirected me to this website to ask same question. So below is just a restatement of my question the first response to my question and my rebuttal to that response:
#1)
What is the name of your state (only U.S. law)? IL
Hello my Father passed in February and I am named as the sole beneficiary to his IRA account. Well in January dad was withdrawing from his IRA to reinvest elsewhere and unfortunately he then passed. My question is this. I am a beneficiary to an empty IRA, but the reinvestments were supposed to be “joint” investments. Otherwise the funds from the IRA go into a restricted trust and I do not have access to them until further notice. Do I have any options to reinvest these funds to reduce the income tax on them or to recover them as a beneficiary? I am totally lost on what I am capable of doing. Thanks in advance. Jim
#2)
Once the funds left the IRA (trust), the beneficiary designation no longer controls as to their disposition in any way. Titling of the investments or accounts where the funds are held along with the terms of the trust, will or intestate succession (depending on the facts), now control.
As to the question of reinvestment, I don’t think that will happen unless you are the sole beneficiary of the funds. Even then, I think it unlikely they could be redeposited before the time limits are up to roll them over.
#3)
I am the sole beneficiary. Is there any way to file an extension for reinvestment?
Permalink Submitted by Alan Spross on Fri, 2009-07-17 21:04
There is at least one IRS letter ruling that permits the executor to complete a post death rollover if there is sufficient evidence that the decedent was in process of rolling over the funds to another IRA account. There must be some evidence that this was your father’s intent, not just the possibility of that. Securing IRS agreement to such a post death rollover is the only way to erase the tax bill and penalty arising from the distribution. This tax bill will be due with your father’s final tax return next spring. The IRS would attempt to recover it from his estate if the taxes were not paid.
This may not be correct, but it appears from your post that your father’s non IRA assets were in a trust. Who are the beneficiaries of that trust and who is the trustee? In the event that you think there was any undue influence exerted on your father in his final days, you need to hire an attorney to represent your interests, as well as determining why your father simply did not name the trust as a beneficiary of the IRA if you are the trust beneficiary.
There are many potential issues to be looked into here. The prior replies you received assumed certain things, as did I, that may well be incorrect. You may need to retain legal representation if the trustee or other family members are evasive or cannot provide you with basic answers as to what occurred and why.