Not allowing and Inherited IRA option on qualified annuity
A client’s father just passed away and the father owned an annuity inside an IRA at Dearborn. Dearborn no longer allows you to distribute to an Inherited IRA as one of their options. They did until the beginning of this year but have since taken it away. I’m questioning the legality of not allowing a basic IRA rule. Can they do this?
This is a large account and taken the five year payout will have a significant tax consequence compared to stretching this over decades.
Thanks!
Permalink Submitted by Alan Spross on Fri, 2012-03-30 18:38
They can do it at the risk of hurting their reputation and primary business, but it is rare. Funds can only be moved by direct transfer to a new inherited IRA custodian, but a check written out to the new custodian FBO client’s inherited IRA passes as a direct transfer. The client could then forward the check to the new custodian. Client should check to determine if they issue such a check, and if not demand to talk to a supervisor or manager.