Thursday, November 29, 2012

AS THIS PERSON FOUND OUT, THE RULES ON INHERITED IRAS CAN BE COMPLICATED

If you take money out of your IRA you have 60 days to put it back into another IRA without the distribution being taxable.  This is known as the "60 Day Rollover Rule."  But watch out for this. 

The 60-day rollover rule won’t apply if an inherited IRA is first paid to you, as a woman who was the beneficiary of her deceased mom’s IRA learned the hard way.

The custodian paid the death benefits to the daughter. Within the usual 60-day period, she set up a new IRA and deposited into the account the check she had received. Because she didn’t arrange to have the money transferred directly into her IRA, the Tax Court says she’s taxed on the distribution (Beech, TC Summ. Op. 2012-74).

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