WWTBAM Bored

I have a poser that was thrown out at me from a friend. Her mother died, and there is an IRA that she will be inheriting. She intends to keep the IRA intact (save for the required distributions).

The problem is with the financial planners who handled the old IRA (and now the new one). She gave them the information you are supposed to give - name, address, social security number.

Then they asked how much she made. She said it was none of their business. They said it was so they could know how much to take out for taxes, and that they couldn't process it without that info.

Now, when I inherited the IRAs from my mother, no one ever asked me how much I made. And, IIRC, the IRA custodian used a flat percentage for any distributions.

We both think the financial planners are trying to use that info so they can pitch products. And we both think they're full of it.

My recommendation to her is to check with a few other places and just get a rollover of the IRA to a new plan, and tell them to go to heck. But, since it's an inherited IRA, that might be touchy.

Analysis / suggestions / recommendations, anyone? Thanks.

Definitely move the money via a rollover. They shouldn't be taking money out at all. That's her job, as is putting aside enough money to pay taxes on the mandatory withdrawals. --Bob

I have asked the same question of a financial friend regarding my (still living) father's IRA for what happens when the time comes.

It is kind of my baby and I would like to keep it going as is.

He said I can just leave it (with various paperwork thingies) and go on from there with required minimum distributions for an inherited IRA.

Per him, I would not have to roll it over.

Spock wrote:Per him, I would not have to roll it over.

That is an option. But apparently this financial planner is being a jerk about things (the inquiry about her income was the last straw), so that is something she is kind of not happy with right now.

SpacemanSpiff wrote:

Spock wrote:Per him, I would not have to roll it over.

That is an option. But apparently this financial planner is being a jerk about things (the inquiry about her income was the last straw), so that is something she is kind of not happy with right now.

I"m not much help, even though I just went through this last year. The difference is that my mother handled things through the same credit union that I do, so when they asked me if I wanted taxes withheld from the distributions and I said yes, they could have had all my income info on file, so I don't know if they actually needed that info or not.

One thing that might be worth checking out: I believe, based on my experience, that you can keep the inheritance IRA, but place it with a different financial planner if you wish. If the heir has a financial person they trust, it might be worth asking them.

As a self-employed farmer, I generally opt out of the tax withholding portions of anything and just do all the taxes at one time. As farmers, our taxes are due at the end of February-VS April 15th.

If the IRA is transferred from trustee-to-trustee account, this is a non taxable, non reportable event. The only tax implications would be that the recipient might be required to take a Required Minimum Distribution annually (reported on a 1099-R).

This is a good article from Turbo showing how even financial institutions make tax reporting errors with inherited IRAs.

https://ttlc.intuit.com/questions/42257 ... erited-ira