Trustee to Trustee Transfer
Brother A died 15 years ago and named his brother B as his beneficiary. Brother B put the IRA in his own name, and he died 9 years ago. He named his wife as his beneficiary, and she put the IRA in her name. She is 72 years old. She wishes to do a trustee/trustee transfer and the current custodian is telling her she cannot do that. She was told by the current custodian that she can’t move the IRA and her only option is to take all the funds out in a distribution. I believe she should be able to do the direct transfer. Am I wrong? Also, I’m not sure if brother B had been taking RMDs while still alive or if wife has been taking them after her husband died. Should she have been taking them even though she is under 73. Also, she is still working for a company owned by her son. Would she be able to transfer the IRA into the company’s 401K and avoid RMDs as look as she is working or is there family attribution rules? If an RMD is required, must she take that before doing a transfer?
Permalink Submitted by Alan - IRA critic on Thu, 2024-06-13 02:22
I assume that you meant they maintained the IRA as beneficiary IRAs, as they were not allowed to roll it over to their own IRAs.
The wife is allowed to directly transfer the inherited IRA to another custodian if she wishes. The current custodian is incorrect and she should elevate the request to a more competent rep. But she certainly cannot transfer an inherited IRA into an employer plan even if the employer plan was also inherited.
Brother B should have been taking annual RMDs based on his life expectancy and his wife should have been continuing his RMD schedule. Her age is immaterial because she is a successor beneficiary.
The family attribution rules will result in her having to take RMDs from the 401k plan as the still working exception will not apply in this case.
As for the inherited IRA, it sounds like there have been RMD shortfalls for years, but the IRS and custodians have often provided little oversight for beneficiary RMDs.