401k deceased owner distribution
I have a client who’s attorney requested a distribution of her deceased ex husband 401k to their minor daughter. The request was made payable to the daughter with mother as guardian. The 20% withholding was done on the transaction. I am questioning whether I can do this as a indirect rollover. If I can will it be titled as a decedent IRA or traditional under the minors name. Thanks
Permalink Submitted by Alan - IRA critic on Fri, 2017-12-15 16:27
Sounds like a disaster has occurred due to attorney error, who apparently requested a distribution instead of a direct rollover. Daughter is a non spouse beneficiary, therefore there is no indirect rollover allowed and no way for her to own the IRA . Any check not made out in direct rollover format (to inherited IRA custodian FBO daughter inherited IRA) will be an irrevocable lump sum distribution and fully taxable. The 20% withholding is also in error because this is not an eligible rollover distribution. I assume you are not referring to the year of death RMD here, but to a lump sum distribution.
Permalink Submitted by Bruce Steiner on Thu, 2017-12-21 23:21
Will they honor the attorney’s request without the signature of the daughter or her guardian?