Multiple IRA Accts in same Institution w/ 1 beneficary list
The 1st IRA Account was opened with E*Trade Brokerage and Beneficiaries were listed on the signed application and money was Trustee-Trustee transferred from a separate Financial institution to establish this new account. Several years go by and money was moved to a safer IRA CD investment – held by E*Trade Bank. This E*Trade Bank CD IRA was opened over the phone and funds were “transferred” from the Brokerage side of E*Trade to the newly established E*Trade bank. We were told at the time that everything would be Identical in the Registry of the new CD accts – including Beneficiaries. These accounts are also Linked together under 1 Brokerage statement.
The account holder is desceased and now E*Trade is claiming that the CD account shows no Beneficiary designation and the funds will have to be transfered to and Estate account and not to the Beneficiaries listed on the Brokerage acct.
They have obviously changed the registration process over the years and now each account opened must have a new application and beneficary document signed by the account holder.
Any suggestions on how to get them to apply the existing beneficiary designation found on the Brokerage account to the IRA CD accounts?
Is there some IRS/Federal Reg. that would prevent them from being able to do this?
Thanks!
Permalink Submitted by Alan Spross on Thu, 2008-07-10 20:19
Regretably, the financial services industry is very prone to this kind of error, and I experienced it myself in a single custodian investment platform change where a new IRA account number was assigned and the beneficiary disappeared. Fortuneately, I discovered this on a routine check of beneficiary designations and highly recommend monitoring beneficiaries for everyone.
I am not aware of any specific provision that addresses reforming beneficiary statements and suspect a higher up at E Trade has this authority subject to analysis of facts and circumstances. A customer should not have to incur the added expenses of probating an IRA account when the error is made by the custodian. In short, I would be inclined to submit all the documentation available including the prior beneficiary statement copies and documentation of phone conversations and ask to have the beneficiary added. If they still refuse, I suggest submitting the client’s will, with a notarized signoff of all will beneficiaries and of course the executor, and again depending on the circumstances threaten possible legal action if they do not comply. Obviously, the client’s stomach for a confrontation vrs the costs of letting this go through probate if the same people will end up with the funds should be assessed. Another factor is that if the IRA owner passed prior to his RBD, this will trigger the 5 year rule for the CD IRA.
Permalink Submitted by Bruce Steiner on Fri, 2008-07-11 19:24
You don’t probate the IRA. You probate the Will.
But you probably want the beneficiary desigation to apply for income tax reasons.
You (or your lawyer) might want to keep at it with E-Trade, and then, if necessary, consider whether it might be possible to get a court order saying that the beneficiary designation applies, and if so, whether it would make sense to do so.