transferring inherited IRA where estate is beneficiary

Submitted by Laura Waterland on Tue, 2020-06-16 20:54

My mom died in 2018 and had an traditional IRA that listed her estate as the beneficiary, I was the sole beneficiary of her estate, and co-executrix. The IRA was initially titled as inherited IRA in her estate account, then it was transferred to my Schwab investment account , titled inherited ira estate of XXX LOS beneficiary of XXX. I had thought that the IRA would be owned by me, but discovered much to my chagrin that the distribution that I took was technically paid to the estate. The estate has been closed for some time.

I am trying to accomplish two things- get a revised 1099 showing that income paid to me, but more importantly getting this IRA rolled over to an inherited IRA that is clearly in my name ( or at least belongs to me). Schwab is refusing to do either unless I have a court order or a PLR. I have shared PLRs that indicate that these IRAs can be transferred to the beneficiaries. Any ideas? Also looking for a custodian who would allow this.



Submitted by Alan - IRA critic on Tue, 2020-06-16 23:21

The account was successfully transferred to Schwab and correctly titled at Schwab, and then Schwab interpreted a request from you as a distribution request?  How did that happen?  If Schwab messed up and you did not contribute to this in any way, you might have recourse against Schwab, but the IRS will not intervene and you have no chance to obtain a PLR. That would be a waste of time and at least 20k of legal costs. But you might have some direct legal recourse against Schwab, depending on exactly how a distribution occurred. It is quite commonplace for a taxpayer to make a distribution request in error, happens very frequently. But did you make an error?

Submitted by David Mertz on Wed, 2020-06-17 12:32

  • Given that a beneficiary RMD was required in 2019 if mom died after RBD, I would guess that the distribution paid to the estate was this RMD rather than the entire balance of the IRA, or, if mom died before RBD, the distribution was perhaps only a portion of the IRA under the 5-year rule.  Note that since the estate was beneficiary, if she died after RBD, the life-expectancy RMD is based on your mother’s age, not your age.  If instead you requested a distribution of the entire balance of the IRA, there is nothing left to move or retitle.
  • Given that the estate still has (or at least had) assets (the IRA, even though it was your belief that the IRA had been distributed from the estate) the estate apparently needs to be reopened, the income reported on Form 1041 and the income distributed to you as beneficiary of the estate, passed through on Schedule K-1 (Form 1041) for inclusion on your individual tax return.
  • If the inherited IRA still exists, you may need to move the IRA to another custodian that is more accommodating of transferring the IRA to one with you as beneficiary so that the estate can be closed.

Submitted by Laura Waterland on Thu, 2020-06-18 13:10

Thanks for the feedback.  Any ideas about which companies would allow me to transfer the IRA?

Submitted by Alan - IRA critic on Thu, 2020-06-18 14:23

The larger the better. You might start with firms where you already have your own accounts and if your balance is significant, you should have added leverage. 

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