Multiple benef on Mom’s IRA

Submitted by Tony Pondel on Tue, 2015-06-09 18:19

A client called and said her mom died. There are 8 beneficiaries on her Mom’s IRA. I recommended that they instruct the current custodian to open 8 accts and split the funds. Custodian won’t do that.

If the heirs each receive a check, can they open a beneficiary IRA at a custodian of their choice and avoid taxation?

Thanks.



Submitted by Alan - IRA critic on Tue, 2015-06-09 18:32

  • A distribution from a non spouse inherited IRA cannot be rolled over, therefore beneficiaries who do NOT want a lump sum distribution must make it very clear to this custodian that there is to be no distribution check issued to them personally. What is the custodian’s explanation regarding refusal to open inherited IRA accounts (assuming all needed info has been provided), and what does the IRA agreement say? Why did custodian accept 8 beneficiaries in the first place if they did not intend to service the IRA after the owner’s death? 
  • At the end of the day the beneficiaries may have to find another IRA custodian and transfer the inherited IRA to the new custodian if they cannot work with the current custodian.

   

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