Erroneous 401k Beneficiary Distribution (rollover intended)
Beneficiary completed Distribution form incorrectly and received an after-tax check from custodian. Beneficiary desired to rollover the account into own r/o IRA. Custodian says distribution is final and cannot be ‘fixed’. Can beneficiary deposit net proceeds (+ amount of tax withheld) into their own rollover IRA?
Permalink Submitted by Alan - IRA critic on Tue, 2017-04-11 20:04
Assuming this is a non spouse beneficiary, there never was an option to do a direct rollover into an owned IRA. A direct rollover into an inherited IRA or inherited Roth IRA were options if executed correctly, but now the only option left is to pay taxes on the taxable amount . Beneficiary can make a regular IRA contribution if they qualify and use this money for that contribution, but this is NOT a rollover contribution.
Permalink Submitted by t bowman on Wed, 2017-04-12 17:26
Thanks. This is spouse, but sounds like that doesn’t matter now anyway? Large 401k & this causes an unfortunate tax situation.
Permalink Submitted by t bowman on Wed, 2017-04-12 17:53
and beneficiary is young & still working (doesn’t need to spend the proceeds!).
Permalink Submitted by Alan - IRA critic on Wed, 2017-04-12 18:19
The surviving spouse could have done a 60 day rollover to their own IRA. In some cases the 60 days can be extended. Are there any unique circumstances with respect to why the 60 day deadline was missed?
Permalink Submitted by t bowman on Wed, 2017-04-12 19:21
Thank you – that is the desired outcome and you have provided the answer we hoped for. Still w/in 60-days; so will proceed.