Inherited IRA Annuity
75 yr old widow inherited IRA variable volatile annuity. If I move entire annuity to a bank account titled as “name of decedent ira for benefit of me” in order to take out EDB distribution of 12.7 years, and then 3 months from then when I decide where to invest, can I move all of the money or a portion of this money from bank to other investments and title “…ira for benefit of me”? Or does the money have to remain in bank account where I moved the annuity originally. Since the market can be volatile, I want to get out as soon as possible from this annuity, but have not decided where to invest as yet.
What is time frame I can move some or all of the money from bank account for reinvestment “ira for benefit of me” purposes, since a regular bank account pays nothing. Does this have to stay in bank account for l year before I can move?
I have asked my CPA and estate lawyer and said I could have penalty and tax consequences to move from the bank account to another investment vehicle (even though keeping title as “ira benefit for …”
Permalink Submitted by Alan - IRA critic on Tue, 2020-09-29 15:03
There could be surrender charges and exit charges, but there should be no additional tax bills for an IRA transfer. Did you inherit this from a spouse? If so, you should do a spousal rollover to your own IRA and your RMDs will be much lower. As for volatility, that’s because the VA is invested in stocks, probably more than you wish. But if you move out of stocks, the returns will probably be close to 0 for the next few years. Your holdings in the annuity or replacement investment should reflect your other assets as well. If you keep your investments in the bank you will probably be stuck with an annuity, a large brokerage firm would probably be better and they may be able to handle the transfer for you if you decide to terminate the annuity and do a spousal rollover, if applicable.
Permalink Submitted by helen roland on Tue, 2020-09-29 17:47
My sister left me IRA annuity. Stated there is no penalty or charge to move to bank account. I want to know if I put in a bank can I move it again to another IRA investment product or do I have to wait l year? that is my question
Permalink Submitted by Alan - IRA critic on Tue, 2020-09-29 18:36
Under IRS rules you can transfer an inherited IRA an unlimited number of times and there is no waiting period, however you will probably have to surrender the annuity in order to transfer it out of the insurance company. Have you asked the insurance company holding the annuity what the fees and costs would be? Any transfer is best initiated by the receiving firm (bank in this case). All parties need to know that you do NOT want a distribution, just a direct trustee transfer of the annuity proceeds. Insurance companies often look for ways to distribute the funds to you, in which case the entire balance will be taxable. If you move to a bank, you will get almost a 0 return in bank savings accounts or CDs, and they may try to sell you another annuity, in which case an entire new period of surrender charges would apply. If you are going to transfer to a bank anyway, you might be better off asking the current insurance company if you can just change your annuity investments from stock sub accounts to something safer that would have a low yield, but no risk of large losses. While it is allowed, most IRA custodians do not particularly want non spouse inherited IRA accounts, so it is often a hassle to transfer them.