Rights of Responsible Party for an IRA of a Minor
We have an individual named as the Responsible Party for a Roth IRA owned by a minor (age 17). This Responsible Party wants to withdraw the principal balance of the Roth IRA as he does not want the minor to have access to the funds when she turns age 18 (even though she could take the money at any time). We are looking for any guidance on whether a Responsible Party is allowed to make a withdrawal like this?? This is in New York. Thanks.
Permalink Submitted by William Tuttle on Wed, 2015-11-04 16:09
I am a little confused with your terminology. I have no specific knowledge in regards to New York. I have no idea what your term “Reponsible Party” is in this regard.A Roth IRA for a minor would normally be in a UTMA/UGMA account with a custodian. Is this what you are referring to?A cutodian has legal responsibility to maintain a UTMA account for the benefit of the minor until they reach the age of majority. In general a custodian is only allowed to remove funds for the direct benefit of the minor. Funds in a UTMA account are irrecoverable gifts to the minor and are the MINOR’s assets, not the custodians.Withdrawal of the balance of the Roth IRA balance without a legitimate need for the minors benefit is not allowed. Certainly removal becuase the custodian just doesn’t want the minor to have access to the funds is imporper. Add in the fact that this is not just a UTMA/UGMA account, but a “retirement” account only compounds what the custodian is asking to do.This sounds like a typical case of buyer’s remorse or in this case donor’s remorse. It is likely your “Responsible Party” was also the donor of the funds.
Permalink Submitted by Jose Morales on Wed, 2015-11-04 18:55
This would be a matter of policy (the IRA Custodian’s) and state law, not IRA regulations.