Beneficiary IRA Correction
We have a client that has a beneficiary IRA at another firm. That firm mistakenly allowed our client to make a 2007 contribution to the beneficiary IRA. The client would now like to transfer her IRA to our firm. Question, is she allowed to transfer the beneficary IRA to our firm and allow us to correct the mistaken contribution or is the prior firm required to make the correction before the beneficary IRA is transferred to us?
Also, am I correct in thinking that in order to correct the mistaken contribution that the contribution amount along with any earning must be withdrawn before the end of 2007?
Permalink Submitted by Al Fry on Wed, 2007-10-03 17:16
Since the other firm made the error, I would make them correct it first. O/W, it could get convoluted.
Permalink Submitted by Denise Appleby on Wed, 2007-10-03 19:32
I agree with Al. It could also be corrected on your side if the entire IRA balance is transferred to your firm- with the risk of being “convoluted”.
The excess can be corrected by tax filing deadline, including extensions. See
http://www.retirementdictionary.com/Excess-contribution.htm
Any NIA must be removed along with the excess. See http://www.retirementdictionary.com/nia.htm