Client dies while funds are in process of indirect rollover
I have a client who was in the process of doing an indirect rollover from Company A to Company B. Company A issued the check in his name and Company B said they would accept an endorsed check directly to them. During the process of getting this IRA opened and issued the client passed away suddenly. Now we have a check that has already been endorsed by the deceased to Company B. If Company A refuses to accept these funds back into the IRA and reopen the account, how can his spouse handle this situation. I am stuck and cannot seem to find an adequate answer on this situation. Also is it legal to ask Company A to reopen the account if they will?
Permalink Submitted by Alan Spross on Wed, 2010-03-17 01:40
Who is the beneficiary on the IRA A and IRA B? Who is beneficiary and executor of client’s estate?
Permalink Submitted by Shawn Freeman on Wed, 2010-03-17 02:15
The wife is both beneficiary and executor of estate. She will be 70 1/2 this year (may) so she has to take an RMD (he was 70 also) anyway. Should we have the company who issued the checks re issue them as a claim and do a spousal rollover.
Permalink Submitted by Alan Spross on Wed, 2010-03-17 02:30
This would be simpler if the B custodian would allow her to open the account as a beneficiary IRA using the check endorsed over to her as executor and beneficiary and then immediately assume ownership of that account. Would not have to go back to A that way.
But is the 60 day rollover limit another issue to be dealt with? DId the death occur in 2009 or this year?
Permalink Submitted by Shawn Freeman on Wed, 2010-03-17 02:51
It just occurred last week. And company B has decided they are not going to accept it with me as writing agent. The 60 day time frame should not be a problem. I recogn we could go t a bank and open an beneficiary IRA for hr and deposit it.
Permalink Submitted by Alan Spross on Wed, 2010-03-17 03:40
That’s OK also. They might require some documentation to make sure the spouse is also the executor. The custodian’s main concern is not getting dragged into any litigation from other parties of interest, but that does not seem to be a problem here.
The IRS has issued a number of letter rulings over the years allowing a sole spouse beneficiary to do the rollover in cases like this, so the main problem is just satisfying the IRA custodian’s concerns so the funds can be accepted. And it is good that the 60 day deadline is considerably in the future.
Permalink Submitted by Shawn Freeman on Wed, 2010-03-17 04:10
Thank you. I am going to call the original custodian tomorrow and see if they will either take the check back and reopen the account (alot of times they will within 30 days) If they wont then I will see if they can just void the original transaction and payout to the beneficiary and since she is the spouse we can do a spousal rollover this way. Am I correct in my thinking that a spouse (and only a spouse) can accept the check and open her own account (IRA of coourse).
Permalink Submitted by Alan Spross on Wed, 2010-03-17 04:27
Correct.