Beneficiary IRA Rollover
Non Spouse Beneficiary instructed custodian inadvertently to distribute Beneficiary IRA. Beneficiary received check, and realized they could not move rollover funds into another Beneficiary IRA. If the check was not cashed, can the beneficiary instruct custodian of error and then provide instructions for a direct transfer between custodians? Thank you
Permalink Submitted by Alan - IRA critic on Fri, 2017-07-28 19:43
No chance of that since beneficiary actually requested a distribution. Such a distribution is irrevocably taxable with no work around, and is probably the most costly error that can be made with IRA accounts. That said, while chances are very slim there is no downside to at least asking the custodian if they will take the check back. Suggest beneficiary should use this money to subsidize their own retirement plan contributions (Eg max out 401k). That would offset some of the tax bill and restore some of the tax deferral lost from the inherited IRA. RMDs on their own plan would also be later and at a much lower distribution rate.