Non-spousal inherited IRA rmd waiver
My father died in Feb 2009 leaving me as sole beneficiary of his IRA. His IRA had a CD that had a maturity date in May 2009. The custodian, KeyBank, and I agreed to convert it to a beneficial IRA upon maturity of the CD. An rmd had been taken in Dec 2008. The bank representative and I verbally agreed to waive his rmd for 2009.
When the bank created the beneficial IRA, they deducted an rmd amount and sent a check payable to me. The bank said this was a 2009 rmd for my father. I asked who’s SSN would be on the 1099-R and they said it would be my SSN, not my father’s.
His rmd and my SSN on the 1099-R? I have power of attorney to wind up my dad’s affairs and this has me stumped. The amount of the check corresponds to what my father’s rmd amount would have been.
The check has not been cashed or deposited. The bank has been very stubborn about taking back the rmd and voiding the check. The bank says I needed to put everything in writing if I wanted his rmd waived for 2009. The bank rep just tells me it’s my fault and calling the bank’s headquarter’s in Ohio results in the same response.
Is there a workable method of reversing this rmd? What recourse do I have, if any with the custodian bank?
Thanks for any info.
Lindy
Permalink Submitted by Alan Spross on Thu, 2009-07-02 20:32
Regretably, you probably have no viable recourse, beyond what you have already attempted. Congress passed the RMD waiver so late in the year, it left all IRA custodian processing systems with no time to re program for changes to automatic RMD distributions or other pertinent policies of the bank. Congress did not provide for rolling RMDs issued in error back to the IRA, knowing that some of this would be inevitable. It did not help that most banks, not the least of them being KeyBank, were all messed up with foreclosures, receiving TARP funds etc. That said, their existing procedures were not customer friendly, because that RMD did not have to be rushed out upon re titling of the account, it did not have to be distributed until 12/09. Also, more shoddy bank treatment of customers by telling you this was YOUR fault, when it was actually their fault. You said a rep gave you the impression earlier that they were able to waive the RMD, and then they issued it. You can still move the funds by direct transfer only to another custodian if you wish AND if Key will provide the transfer. Note that you cannot roll these funds over by indirect 60 day rollover, so be sure in future discussions that they do not send you another check. For all we know, Congress could extend the RMD waiver for another year, probably in December as they tend to do. Granted, his RMD was considerably larger than yours will be.
As for the SSN, that is correctly yours. The recipient of the funds is the one taxed on the distribution per the 1099R.
About the only comfort you can take from this is that your future RMDs will be less because of this distribution in years that your marginal tax rate may well be higher. You might also be able to use the distribution to help fund your own regular IRA contribution or even a Roth conversion now or next year when the income limits disappear. That way you would enhance the future value of your own IRA accounts.