Inherited IRA ROLLOVER?

Submitted by Rene Nourse on Mon, 2017-04-24 18:02

I recently took on a new client, who has an inherited IRA and elected to to take out a large sum – over and above their RMD and paid taxes on it in early March. He doesn’t need the money and wasn’t completely aware of the tax consequences. Can the 60 day rollover rule apply here- giving him the opportunity to deposit the funds (net of his RMD) back into the inherited IRA? His accounts haven’t transferred to me yet, so he could re-deposit them into the new Inherited IRA being set up here.



Submitted by Alan - IRA critic on Mon, 2017-04-24 18:19

A non spouse beneficiary cannot roll over any distribution from an inherited IRA, but a spousal beneficiary can do a 60 day rollover to their own IRA.

Submitted by Rene Nourse on Mon, 2017-04-24 18:22

Just to clarify- no rollover even if going into an inherited IRA account as well?

Submitted by Alan - IRA critic on Mon, 2017-04-24 18:31

Correct. If a client wants to change IRA custodians (not the case here) they must do so by a direct trustee transfer since no rollovers are allowed. This is also true of non spouse inherited qualified plans. Once a check is cut payable to the beneficiary, the distribution is irrevocable. Perhaps future legislation will change this, since signing a distribution request is the most common and costly error beneficiaries make.

Submitted by Rene Nourse on Mon, 2017-04-24 18:39

Thanks for the clarification.

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