Alan, need your help. on prohibited NS Beneficiary rollover

Submitted by David Castelli on Fri, 2016-04-29 18:53

You responded to my post yesterday……

Now I have confirmation that the trustee incorrectly rolled over a 57 year olds 401k to his own inherited IRA(Non Spouse) instead of his own regular IRA

Now the fiduciary tells us in order to now take the money that is still in this inherited IRA out, it will be a taxable transaction to move into the correct IRA

Is that correct? more Importantly, we want to request a private letter ruling with the IRS

Can you guide me as to who can prepare this?

Thank you very much

David



Submitted by Alan - IRA critic on Fri, 2016-04-29 19:01

Is this a newly opened inherited IRA or did it already have a balance before the roll over? Has it been more than 60 days since the rollover? How was the rollover processed?

Submitted by David Castelli on Fri, 2016-04-29 19:57

it is not a newly opened inherited IRA. yes, it had a balance before the rollover. past 60 days since the rolloverthe fiduciary put in the wrong dang account

Submitted by Alan - IRA critic on Fri, 2016-04-29 21:08

  • There is no easy solution to this unless the error was caused by the negligence of one of the other custodians. With respect to the processing of the transfer, was the inherited IRA custodian involved prior to receipt of the funds? Or were distribution papers completed by the client showing the wrong account number and 401k administrator issued the rollover check accordingly?
  • It is also possible that the inherited IRA custodian could have “hard coded” the account so that no contributions could be added to it. Sounds like that was not done. Unless one of these parties committed a serious processing error, it will be very difficult to pressure the IRA custodian to transfer the money back out of the inherited IRA and into an owned IRA. I assume client also has a owned IRA with this custodian?

Submitted by David Castelli on Tue, 2016-05-03 13:22

waiting on paperwork . i just want to make sure the client didnt fill out the paperwork using the wrong IRA account. that is what I am told, but i need to see proof of this  first. When i get this i will get back to you. just want to make sure it is Administrator fault and not client, although i am surprised this account wouldnt be blocked from a contribution since it would be ineligible ..will get back to you and thanks again

Submitted by David Castelli on Wed, 2016-05-11 14:49

Hi Alan…..looks like paperwork indicates administrator told client to put money in a specific account, ie gave  them the wrong account number.and we have a letter from administrator that they state the error was made by them , not the taxpayer.Since they are now saying to get this money out of the wrong IRA into the correct IRA will be a taxable event, this is why we want to request a waiver of the 60day rolloverDo you prepare or can you guide us to a firm that you would recommend prepare the private letter ruling?As always, thank you for your help and expertise

Submitted by Bruce Steiner on Sun, 2016-05-15 12:11

  • We’ve obtained many private letter rulings waiving the 60-day deadline for a rollover.  However, the IRS only has discretion to waive the 60-day deadline in the case of a participant or IRA owner, or his/her spouse.

 

  • Can you clarify the facts?  You refer to a trustee, an administrator, and a fiduciary.  What is the relationship of the beneficiary to the decedent?  How do the trustee, administrator and fiduciary fit in?

 

  • Bruce Steiner

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