Spusal Beneficiary IRA
My cousin’s husband died this year – she is 53 and we may need to access his IRA funds for living expenses. I had instructed the financial institution she is working with to create a beneficiary IRA for her and not to do a roll-over. Because the paperwork was filled out wrong, apparently the financial institution liquidated her holdings and moved the funds into a roll-over IRA. It has not been 60 days. The question is once the funds are in a roll-over IRA, is it too late to fix the problem and move the funds into a spousal beneficiary IRA? Thank you for your help with this. Sarah Cato
Permalink Submitted by Alan Spross on Fri, 2010-05-28 19:20
Unless the error was made by the IRA custodian, there is nothing that can be done to reinstate the inherited IRA status. Therefore, she needs to consider a 72t (substantially equal periodic payments) plan in order to get distributions penalty free until age 59.5. As you know, these plans are very rigid and carry severe penalties if the plan is busted prior to age 59.5 in her case.