dmertz
Level 15

Retirement tax questions

All of the previous replies are correct.  The funds can only be moved to an inherited IRA for the benefit of a non-spouse beneficiary by direct rollover (from an employer plan) or transfer (from an IRA, as in this case).  Once paid to to the non-spouse beneficiary, no deposit into an inherited IRA is permitted; the funds are irrevocably distributed and subject to the resulting tax consequences.  Adding $70,000 to taxable income likely has also resulted a tax underpayment penalty.

 

If the money was deposited into an IRA  that was intended to be an inherited IRA, rjs is correct that IRA fails to be an inherited IRA and constitutes an regular owned IRA no matter how it is titled.  The deposit results in an excess regular contribution that is subject to penalty unless corrected by the due date of the 2023 tax return, including extensions.  However, with the funds in an IRA annuity, you might suffer a surrender charge to be able to obtain the corrective distribution.

 

I also agree that, in my opinion, the financial guy is, at best, incompetent.

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