correcting inherited IRA mistake
Individual came in my office today and stated that her father passed away in 2013, he had an IRA and the financial institution that had it simply tranferred it over into daughters name. Daughter states that institution made a mistake in titling and she wanted it set up as inherited IRA, can that transaction be reversed. Also would it matter if daugther was not listed as beneficiary? I realize she cannot stretch it over her life expectancy but thought that the 5 yr distribution option might still be on the table rather than having to take distribution all in one year.
Permalink Submitted by Alan - IRA critic on Tue, 2014-04-01 19:36
The 5 year rule would apply only if father passed prior to his required beginning date. I assume his estate was the named or default beneficiary. If no distributions have been taken (no 2013 1099R received in January), the incorrect titling can be corrected by the IRA custodian. However, that might take some persistence unless it is clear that the custodian was solely responsible for the error.
Permalink Submitted by Don Warnke on Wed, 2014-04-02 13:08
The father turned 71 in 2013 and died in 2013, so in that case would the 5yr rule apply?
Permalink Submitted by Alan - IRA critic on Wed, 2014-04-02 19:12
The required beginning date is 4/1 of the year following the year he reached 70.5. Would need both the date of death and date 70.5 was reached to determine if death was prior or after the RBD.