Transferring an inherited IRA
Daughter age 50 has an IRA she inherited from her father. She would like to transfer it to another custodian. Current custodian has the account titled “Father, deceased, Daughter beneficiary IRA”. The receiving custodian has asked me to remove the father’s name from the paperwork and simply check a box on the application that indicates it is an inherited IRA. Mr. Slott has said in the past that the deceased person’s name must be in the title of the account for it to maintain it’s beneficiary status. Has this changed? If I were to take the deceased father’s name off of the paperwork, what are potential problems or tax consequences for the client?
Permalink Submitted by Alan Spross on Wed, 2011-04-13 21:18
Nothing has changed in this respect.
There may not be any immediate consequences because errors in registrations can generally be corrected without a deemed taxable distribution. IRA custodians have different system requirements that can lead to variations in the registration which still meet IRS requirements, but I have not heard of one that wants to eliminate the decedent’s name altogether. I think the discussion should be elevated up the ranks with the new custodian to a more experienced person because they appear to be operating outside IRS guidelines here. If it cannot be resolved, it might be wise to select a different custodian.
Above all, make sure she does not take a distribution for rollover purposes because there is no solution to that error.