Potential issue trustee transferring into inherited IRA
My late sister had Roth IRA CDs, naming me as sole beneficiary, at Bank A and Bank B. Bank A allows inherited IRA accounts, while Bank B does not. I would like to aggregate the funds and open one inherited IRA at Bank A. Is it permissible to trustee transfer directly from a Roth IRA into an inherited Roth IRA? What do I do if Bank A (or any successor trustee, for that matter) only accepts like-titled trustee transfers (i.e. inherited IRA to inherited IRA)? Thanks.
Permalink Submitted by Alan - IRA critic on Fri, 2017-04-14 02:33
If you want to continue the inherited Roth at Bank A, find out how they intend to handle the prior CD. If you must purchase a new CD for the inherited IRA, see if the Bank will waive the early withdrawal penalty due to death of the depositor. Most banks will do that. Then ask them if they can request a direct trustee transfer from Bank B. You will have to provide death Certs and your beneficiary info to both banks so they can properly title both IRAs in beneficiary format. If Bank A is to be the surviving custodian, you will get more help from them and probably will get no help from Bank B. Do not let either bank issue you a check as you cannot roll over a distribution. While a distribution may well be tax free because it is a Roth, you do not want to lose the benefit of continued tax free compounding even though you will have to take inherited IRA RMDS from the inherited Roth accounts. You must have both accounts re titled before you can transfer either of them to a new bank or to a non bank custodian. I would only stay with a bank custodian if all you ever want to hold in the inherited Roth is a CD.