Roth IRA Beneficiary ?
A client has a Roth IRA CD and his bank is saying the contingent beneficiaries, his children, would need to cash out of the cd upon his death. Is that correct?
Thanks!
A client has a Roth IRA CD and his bank is saying the contingent beneficiaries, his children, would need to cash out of the cd upon his death. Is that correct?
Thanks!
Permalink Submitted by Alan Spross on Fri, 2011-02-11 19:24
The bank is just referring to the actual CD not being transferable to the children. But the inherited Roth IRA can remain intact and the bank could directly transfer the cash from the initial CD to new beneficiary CD IRAs for each beneficiary. If the children do not want to continue with this bank and want to change custodians they can only do so by a direct trustee transfer of the redeemed CD. Any distribution they receive cannot be rolled over indirectly to another Roth custodian and might be partially taxable if the Roth is not yet qualified.
I think you meant to say that the children were the designated beneficiaries, not contingent beneficiaries. If they are contingent they only inherit if the designated beneficiary pre deceases the client.
Permalink Submitted by Dennis Prout on Fri, 2011-02-11 20:51
Thanks Alan!