Any Fix for Error on Inherited IRA?

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tripletmoma
Posts: 1
Joined: Tue Mar 20, 2018 12:00 am

Any Fix for Error on Inherited IRA?

Post by tripletmoma »

My father passed away last month and my mother (the named beneficiary on his IRA CD) wanted to get it moved over to her name. I went with her to assist in any questions that came up. She was going to just roll it into another IRA CD at the same bank but their rates were terrible. I knew we could get better rates else where. So I advised her to get it cashed out in her name and we'd have 60 days to find another IRA CD to roll it into. I even asked the bank's IRA department (who was on the phone helping the branch) if the 60 day rollover rules applied in the case of an inherited IRA and they said yes. So we had the check issued today in my mother's name. The check has not yet been cashed. I double checked this thought process today and I've found that there is NOT a 60 day provision for rolling over in the case of an inherited IRA. That makes no sense to me !!! Why would a widow not be provided the same ability as a normal person (???). If we proceed as we had planned the full amount will be a taxable event and will cost us dearly. Is there any way to fix this at this point? I'm wondering if we can go back to the bank and ask them to unwind the distribution (especially since we haven't cashed the check and they advised us incorrectly). Also, could we treat this as a normal IRA roll over and create a new IRA at another bank in my father's name and fund it with the check we have? and THEN handle the inheritance separately? Any smart folks out there have any other ideas? I feel absolutely SICK that my advice to just look for a better CD interest rate is going to cost her 12% or so in taxes. There must be a way to fix this simple error. No?

Thanks so much for the advice!
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 11:25 am

Re: Any Fix for Error on Inherited IRA?

Post by PFInterest »

i dont know how i found this thread....and its older than the 2 months you were looking for. so maybe it will help someone else.
but the answer is, an IRA inherited from a spouse is subject to the 60 day rollover period.

https://www.irs.gov/retirement-plans/pl ... eneficiary
bsteiner
Posts: 9208
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Any Fix for Error on Inherited IRA?

Post by bsteiner »

Under Section 402(c)(3)(B), the IRS has discretion to waive the 60-day deadline "where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement."

Revenue Procedure 2016-47 sets forth circumstances where the taxpayer need not obtain a ruling: https://www.irs.gov/pub/irs-drop/rp-16-47.pdf.
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