Inherited IRA titling/rollover
A client of mine (we’ll call her Sally Smith) is planning to rollover her deceased father’s (James Smith) Government Thrift Retirement Plan to an inherited IRA with Bank of America. We are in the process of completing the necessary paperwork and titling of the account. We are planning to title the account; James W. Smith IRA, FBO Sally J. Smith, beneficiary. Is this OK? When we request the actual check from the Government Thrift plan, should the check be made payable exactly how it is listed above or can it be made payable simply to Sally Smith (and then sent to Bank of America to be deposited to the inherited IRA Account)?
Thanks
Permalink Submitted by mk foss on Wed, 2008-10-22 16:34
The titling of these accounts is sometimes the preference of the custodian. The latest version I’ve seen would be: Sally Smith Beneficiary of J. Smith IRA. Sally’s SSN would be placed on the account.
It’s preferable to have the funds wire transferred to the new IRA; if that’s not possible a check should be made out to the custodian with a reference to the new account name or number or in the name of the new account. A check in Sally’s name could be fatal – it would look like an illegal rollover.
Permalink Submitted by Al Fry on Wed, 2008-10-22 17:28
Not “could be” but “WOULD BE” fatal. To quote Ed: “Non-spouse’s can NEVER do rollovers”. Obviously, they can do direct tranfers, which in this case would be a “Direct Rollover”
Permalink Submitted by charles lore on Thu, 2008-10-23 01:35
CAREFUL .. IRS was very specific.. It should be James Smith ( Deceased) IRA FBO Sally Smith….. Make check payable same way
Permalink Submitted by Al Fry on Thu, 2008-10-23 02:29
Either titling will work, however the IRS prefers the name attached to the SSN to be first: “Sally Smith as bene of John Smith”, is their more recent suggestion.