NFT: Question about Inherited IRA...

But the investment firm being switched will not have any effect on your mother or the treatment of the transaction. If you do switch, have ML make the check out to the new investment house. Make sure your mother does NOT cash the check and re deposit.

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they can be spread out over her expected lifetime

The one exception is if the beneficiary form filed with the IRA custodian named your mom as a primary beneficiary and you kids as a secondary beneficiary, then she can "disclaim" the IRA and it passes to you guys as the secondary beneficiary.

But you should definitely consult an accountant, who specializes in IRAs and estates

transfer the money directly from the old IRA to the new one set up for your mom

it's not like ordinary IRAs where you you can take the cash and then redeposit within 60 days and avoid a penalty

I inherited an IRA from my dad a few years ago and it was originally thru Merrill Lynch. It took me over a year to transfer it to another institution b/c ML was so difficult to work with--always telling me I needed to complete another form, that it had expired, was filled out wrong, etc. Anytime I called them, I was usually told that the dept was closed and when I actually spoke with anyone, they were clueless (or intentionally trying to make things difficult--not sure which). Anyway, it finally got done. As for distributions, I think different rules apply depending on the relationship between the decedent and beneficiary. Best of luck

aren't taxable so there is no need to roll it over or worry about paying taxes on it.

In comment 12043623 Gman11 said:

Quote:

aren't taxable so there is no need to roll it over or worry about paying taxes on it.

Exactly. The interest earned buy the account is taxable but that's a small amount comparatively.

So there is no tax on any of the proceeds.

Until withdrawl. So there is that, I believe. Otherwise, it wouldn't be an IRA.

The first is to their branch manager, and the second is to FINRA.

In the link, see the section entitled "Report a problem with an investment professional."

She will get answers and cooperation, right quick.
Link - ( New Window )

One of the reasons I love this place is that there's this kind of advice available.

Apparently my mom spoke with someone in her state and there's some things which appear improper about the way the matter was handled. So, we'll see.

Lord, what a mess. And these people are related to each other!

IRA accounts generally have beneficiary designations and this supersedes a will (so there is no probate). Tell your mom to first contact the investment house that she wishes to move the Roth IRA too. They will direct her ( and most will get involved in the process) on what she needs to do. She can do a direct rollover to a new investment house.

I am currently going through a similar situation. Marty is accurate. However, before you get that point MLynch is going to have to set up an Inherited IRA in your mothers name that is for her individually. Separate from the other beneficiaries. There should be some paperwork (Death Certificate, and personal stuff that needs to be sent. Unfortunately it is possible that all the beneficiaries named are going to have to fill out the same form (all signatures on the same form, as well as individual forms to fill out) before they separate the money into individual accounts. Once the account is set and money transferred, then contact whoever you want to open a fund with and open an account with them and they will handle everything from there. Ive been dealing with Fidelity and they have made things easy. Vanguard is also a good company to deal with, and both have low cost funds which are great for investing. As far as the type of distribution, you have to yearly minimum distribution which can be taken once a year, monthly or quarterly, since she is not a spouse. You can take more than the minimum out in any given year. It is based on the beneficiaries age and life expectancy and the amount in the fund on Dec. 31 of that year. Now there are two types of Inherited IRA. One is long term, you draw it out basically for rest of your life until depleted or transferred to your beneficiaries. The other is a 5 year distribution. You have to take yearly payments but the entire value needs to be withdrawn within those 5 years or you incur tax implications.

Normally, a Roth is considered the best of the two because there are no requirements for annual withdrawals and you can leave the money in for
your lifetime and let your children inherit it from you after years of growth.
Also you don't have tax consequences when you withdraw which you have with an Inherited IRA.

I believe there are restrictions to taking out Roth funds if you are not yet 59 1/2
and perhaps that's why your mother wants to make the change. I don't know what the rules are for a Roth inherited but if they permit an inheritor to take funds out at will then a Roth is definitely they way to go. You can get the answer to this question from a knowledgeable CPA or with a phone call to the IRS. So the issue may be how old is your mother when she has the inherited
account in her name.

If she does decide to switch it to an Inherited IRA then she must be careful how
she words the account name. If she does set it up as an IRA account she will be forced to take it all out in five years. If she sets it up as an Inherited IRA Account from the name of the deceased she can take it out based on her life expectancy plus 10 years. It is much more generous in terms of allowing the money to remain invested and growing.
This whole thing is not a simple transfer issue. It has to be thought through with all the possibilities outlined and considered.

In comment 12043641 BillT said:

Quote:

In comment 12043623 Gman11 said: Quote: aren't taxable so there is no need to roll it over or worry about paying taxes on it. Exactly. The interest earned buy the account is taxable but that's a small amount comparatively.

No, the interest is not taxable. None of it is taxable. You can not rollover from a Roth IRA to a Traditional IRA. You don't need to roll it over to another Roth or any other account because all of the proceeds are tax free.