Bank distributes IRA to beneficiary
a father died at 74 leaving his IRA to his 2 kids. instead of establishing beneficiary IRA’s the kids 3 weeks ago took the proceeds out of the bank. now they want to avoid taxation on the proceeds. any way to establish beneficiary IRA’s for the 2 kids given the bank already distributed the proceeds?
Permalink Submitted by Alan Spross on Mon, 2007-10-01 03:55
The only chance, and it is probably an extreme long shot, is to take the checks back to the bank to be voided if they have not been cashed, and start over. IF the checks have been cashed, the long shot becomes no shot at all.
This costly error is all too common, and it seems to occur most often with banks. The staff that processes these requests are frequently not trained to explain the consequences of distributions that are not subject to rollover. I do not know if this is related, but many institutions are not nearly as interested holding wasting beneficiary interests as they are holding owned accounts, so there are probably a few cases where the bank procedures in this respect may be by design, as cynical as that sounds……….