Non-Spousal Benie on 403b? if eligible for 60 day rollover?
Client miscommunicates with deceased Mother’s 403b Custodian. Instead of telling me he needs a Letter of Acceptance from new custodian of inheriance IRA he has the old custodian cut the check in his name. Spoke with old custodian and they tell us they can’t back out the transaction but we should still be eligible for a 60 day rollover to the Inh. IRA. There was no withholding done on the distribution, can we still get this in the INH. IRA if we do this within 60 days? Or does the 60 days not apply in this situation? Thanks!
Permalink Submitted by Jesse Eiynck on Fri, 2008-05-23 15:05
BTW: client was listed as the direct beneficiary on the account and the only one.
Permalink Submitted by Alan Spross on Fri, 2008-05-23 22:29
Sorry, but he is out of luck and the old custodian is incorrect. The non spouse inherited IRA can only be created by a direct transfer, not by rollover and the PPA is very clear on that. Therefore, the 60 day issue does not even apply.
In addition, the old custodian is not obligated to offer a direct transfer even if the client had requested one. IRS rulings to date indicate that the transfer is optional for the custodian, and many of them are not concerned about the tax losses from lump sum distributions.
Permalink Submitted by Jesse Eiynck on Tue, 2008-05-27 18:48
Thanks Alan! We figured it out on our end from the new potential custodian as well.