non spouse bene took a direct distribution
the company that had the mother’s IRA would not allow assets to be transfered to another institution to a bene IRA . they gave the son 3 options.
a- distribution
b- 5 year deferred payment
c- to another annuity IRA held at the same company . I am assuming they meant another annuity bene IRA.
what are the options for this client now that they have a check made payable to their name? can they deposit the check into a bene IRA somewhere else?
Can they deposit the check into their own checking and then have a new check made payable to the new custodian so that they can deposit.
I appreciate your reply.
Permalink Submitted by Alan Spross on Tue, 2009-12-22 19:56
That company is not very consumer oriented. A check made out to the new IRA custodian FBO the beneficiary would qualify as the required transfer of the account. What cannot be done is a rollover by a non spouse. So once a check is made out to the non spouse beneficiary, it becomes a taxable distribution. The only possible solution to this is to return the check to the institution with a letter refusing an actual distribution. That could work or they might just refuse to accept it.
They cannot roll it over or deposit it into another account and write a check on that account.
This illustrates the possible restictions a non spouse beneficiary can face when the IRA is held by an insurance company or inflexible bank. Retaining assets seems to no longer be a goal once a beneficial interest takes over an account.