Beneficiary IRA Rollover

Submitted by Tim Seiders on Tue, 2023-10-24 19:57

I have a client who has a beneficiary IRA that is a brokerage account at National Financial Services.
The client needed money ($15,000) for a short period of time.
I figured that we could take the money out and return it within 60 days.
Upon trying to do so we are being told that it can’t be done.
That doesn’t make sense to me.
If they persist, I imagine we could treat the distribution as if we were intending all along to establish another beneficiary IRA at another company and do just that.
Do the folks at NFS have it right or wrong?



Submitted by David Mertz on Tue, 2023-10-24 20:31

  • The tax code does *not* permit a non-spouse beneficiary to roll over a distribution from an inherited IRA.
  • Assuming that this beneficiary is not the surviving spouse of the deceased IRA participant, NFS is correct.  Any IRA custodian that allows such a rollover is committing an error that results in the beneficiary making an excess contribution that is subject to penalty.  There is no alternative except for such a beneficiary to include the income on their tax return and keep the cash to use as they would any other cash they have.

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