Non-Spouse beneficiary & 60-day rollover
Have the rules on this changed or is a direct transfer still the only way for a non-spouse beneficiary to move money from a parent’s account?
Have a situation where mom died and the custodian sent the son a check for the balance and withheld 20%.
What are his options, if any?
Thanks!
Permalink Submitted by Alan - IRA critic on Mon, 2022-07-25 16:49
He cannot roll it over and he will have to report the entire distribution in taxable income. His only recourse is having some documentation that he did not request this distribution, and if so he should return the uncashed check to the custodian with the documentation and request to restore the distribution to the inherited account. These restrictions have always existed. Not sure why 20% was withheld. Was this a 401k account?
Permalink Submitted by Jason McBride on Mon, 2022-07-25 17:57
It was a TSA Account. Does that change anything? He already cashed the check, and that was about 55 days ago.
Permalink Submitted by Alan - IRA critic on Mon, 2022-07-25 18:26
Being a TSA (403b) does not change anything. Beneficiary will get a 1099R and have to report the full distribution as taxable income. Son could have done a direct rollover to an inherited IRA most likely subject to the 10 year rule, but he may have either signed a distribution request, or perhaps ignored a notice from the plan regarding small accounts. There are several possibilities that could have resulted in this taxable distribution being made.
Permalink Submitted by Jason McBride on Mon, 2022-07-25 18:30
Thanks. As I thought. He should have done nothing until he knew what he was doing. Too late now.