Beneficiary of an ira that is in a CD
Hi recently my grandparent has sadly passed away and I’m inheriting her IRA that is in a CD. The financial institution has drug their feet for the past three months and I’ve still yet to see a check somewhere I’ve told them to close out the CD and they had me open my own IRA beneficiary account and that was two months ago why am I waiting so long to receive any of the money and I’ve already filled out all the forms possible by the way LPL financial is the institution.
Permalink Submitted by Alan - IRA critic on Tue, 2018-10-16 16:17
Be aware that if any check is made out to your personally, you will be taxed on that amount because you cannot roll over such a distribution from an inherited IRA. The bank may waive the early withdrawal penalty due to death of the CD holder and interest rates are rising. If the bank deposits the funds into your beneficiary IRA, do you want to stick with CDs with this bank, CDs at another bank, or transfer to a non bank custodian that offers many more low cost investment options? Are you sure you have submitted all the data you require such as the form of death certificate for your grandparent, your SSN, address or other data they require? If you have, it is not clear why the transfer to the inherited IRA is taking so long. You will have to call them and ask what the problem is, but be sure you know how you want to proceed. You will also have to name your own beneficiary. Finally, you will have to take annual beneficiary RMDs and will have to be sure if you remain in CDs with this bank or another bank, that the bank will allow the RMD distribution without charging you an early distribution penalty for the RMD that must be taken from the CD. Again, the idea of “seeing a check” infers that such check would be made out to your personally and end up as a taxable distribution. You would no longer have an inherited IRA once they cut a check. What you want is an internal transfer of cash to your inherited IRA, no check. You can then transfer it to another custodian, perhaps the one you use for your own IRA without having a taxable event. Finally, if the grandparent was subject to RMDs and did not complete the 2018 RMD, you must have that RMD distributed to you this year, and you will get a 1099R and report this on your own return. Your own beneficiary RMDs do not start until 2019.