Broker Transfers IRA Account with No Beneficiary Designation

Submitted by Robert Minasian on Thu, 2013-06-20 21:10

Here is the Scenario and I am trying to understand IF there is a Fix:

Husband transfers his IRA account with his Broker to a new firm he joined. The receiving Broker Dealer was “so kind” to utilize its staff to help the Broker with the transfer-in paperwork for the massive number of accounts that needed to be transferred-in. BUT, the incoming IRA Application NEGLECTED TO NAME HIS SPOUSE AS HIS PRIMARY BENEFICIARY as he had designated on the paperwork with the previous Broker Dealer.

The spouse dies and the new Broker Dealer / Broker advises the Surviving Spouse of a problem and claims it must pay or transfer the IRA account per the Will OR TO THE ESTATE OF ….

Current Broker Dealer hasn’t been helpful on fixing mistake.

Questions:
1) Could the Surviving Spouse appeal to the IRS with the prior paperwork and fix this problem by allowing her to Inherit the IRA as intended by the Spouse?
2) Is there an easy fix to assure that the Surviving Spouse can take over the IRA Assets as intended by the deceased spouse?

No one is helping the Widow and it appears headed to litigation; not good.

Thank you for any feedback, questions or comments.



Submitted by Alan - IRA critic on Thu, 2013-06-20 21:40

  • Who completed the incoming IRA application? Did decedent sign it? If purely clerical error, seems like this should be solved without litigation.
  • Does decedent have a will naming his spouse as sole beneficiary? Or if no  will, does his state intestate provisions direct 100% to the surviving spouse? In those cases there have been many letter rulings allowing the surviving spouse to roll over the IRA. This may be easier if the spouse is also the executor, but that is not a requirement.
  • Accordingly, the cost of any litigation needs to be compared with that of securing a rollover through the estate. The cheapest/quickest solution should be Plan A, and the other solution Plan B. If the will falls into place, I don’t know if any custodian would establish an IRA for the spouse without a PLR, despite the precedent.

  



Submitted by Bruce Steiner on Fri, 2013-06-21 01:55

As Alan pointed out, it may be possible to get the IRA to the spouse via the estate, in which case the spouse can roll it over.  See my article on this subject in the October 1997 issue of Estate Planning:  http://www.kkwc.com/docs/AR20050125164755.pdf. Why is “no one” helping her?  Why isn’t her lawyer helping her? 



Add new comment

Log in or register to post comments