Last year, a client retired and rolled his pension to his IRA, at Schwab. Unfortunately, he had brain cancer and mistakenly wrote the ROTH account number on the pension rollover document.

The check was issued, mailed to him, and forwarded to Schwab, who then deposited it into his ROTH IRA, because that was the account number indicated on the check.

January 1, this year, he died. His wife called me, 2 weeks ago, and came in. This is when we discovered that the “missing” ~$628K pension rollover was in a Roth IRA.

Ironically, just prior to him completing the pension rollover documents, he attempted to transfer his Schwab IRA to Pershing, but made the same account number error (entered the Roth account as the relinquishing account number) and the transfer was rejected because the receiving account was a traditional and the relinquishing account was the Roth. I mention this only as an “set a precedent” indication that he had the account numbers transposed.

Schwab is attempting to move the Roth into a Roth for the wife (both are/were in their early 60’s) but we explained that it was “mistakenly” put into the Roth.

Schwab is not sure what to do to fix this.

She received the 1099 showing $0 taxable in box 2a and code “G” in box 7 so it was clearly intended as a rollover to a traditional IRA. He and I discussed moving the pension to his traditional IRA, but he completed, and submitted the pension rollover forms, himself, with the incorrect account number.

At this point, we are hoping Schwab will see that it was intended to be in the traditional IRA, and simply transfer it, then let her inherit that IRA, but, if they cannot do this, can she do a recharacterization, as the beneficiary, either before or after it becomes her account?

Any other suggestions?