If I understand you correctly, your father-in-law converted a traditional IRA to a Roth IRA. A traditional IRA is pre-tax; a Roth IRA is post-tax. This means that when the traditional IRA is rolled over to a Roth IRA, you must declare the entire distribution as a taxable event, so that the money in the Roth IRA will be post-tax.
Did no one at the bank explain this consequence to your father-in-law?
See https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-rollovers-and-roth-convers... for the usual treatment of how this rollover is handled (at the bottom).
What you should do is contact the bank and ask them to recharacterize this rollover from Traditional IRA to Roth IRA to be a traditional to traditional, which would maintain the pre-tax status of the money in the IRA.
However, this may no longer be possible. The IRS says:
"Can I recharacterize a rollover or conversion to a Roth IRA?
Effective January 1, 2018, pursuant to the Tax Cuts and Jobs Act (Pub. L. No. 115-97), a conversion from a traditional IRA, SEP or SIMPLE to a Roth IRA cannot be recharacterized. The new law also prohibits recharacterizing amounts rolled over to a Roth IRA from other retirement plans, such as 401(k) or 403(b) plans.
How does the effective date apply to a Roth IRA conversion made in 2017?
A Roth IRA conversion made in 2017 may be recharacterized as a contribution to a traditional IRA if the recharacterization is made by October 15, 2018. A Roth IRA conversion made on or after January 1, 2018, cannot be recharacterized. For details, see “Recharacterizations” in Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)."
Please see https://www.irs.gov/retirement-plans/ira-faqs-recharacterization-of-ira-contributions
