Inherited IRA Indirect rollover
I have a client who recently lost her husband. His IRA and Roth were with another firm and that firm subsequently moved the funds into Inherited IRAs for my client (she was named beneficiary) rather than into IRA/Roth in her name only.
She would rather have these funds in her own IRAs and not have to follow Inherited IRA rules. We cannot do a trustee to trustee transfer for the assets from Inherited IRAs to non-Inherited IRAs; however, would we be able to do an Indirect rollover and put the inherited IRA assets into her personal IRA/Roth?
Permalink Submitted by Alan - IRA critic on Wed, 2021-06-16 16:27
A 60 day rollover for a surviving spouse is possible, but because only one of these is allowed within a 12 month period and she has two accounts. She should be able to simply notify the current custodian that she is electing to assume ownership of the inherited IRAs. This is done by a non reportable transfer. She should then open owned TIRA and Roth IRA accounts at the new custodian and provide them with info for them to directly transfer (pull) those accounts over to the new accounts at their firm. This avoids the rollover limitation, and she does not have to handle the funds, receive checks, receive 1099R forms, or report any distributions on her tax return. NOTE: If rolled over to her own accounts, any taxable distributions will be subject to the 10% penalty if she is under 59.5.