Inherited IRA screw up

[wolf]

Good news. Had you signed anything? Had they advised you of your options?

What sort of pressure did you put on them?

Was there a quid quo pro of some sort? (Sorry.... I couldn't resist).

Great. Thanks for letting us all know of the outcome.

I to would be interested, since you mentioned "Vanguard", (well regarded company, I have $ with them forever). Strange Vanguard, would not discuss, inherited IRA, when you first contacted them.
It would be to their advantage, to use the opportunity to gain a new customer.

Me too, just curious.

oh well, nice x'mas present.

 

[jpeter1093]

Great. Thanks for letting us all know of the outcome.

I to would be interested, since you mentioned "Vanguard", (well regarded company, I have $ with them forever). Strange Vanguard, would not discuss, inherited IRA, when you first contacted them.
It would be to their advantage, to use the opportunity to gain a new customer.

Me too, just curious.

oh well, nice x'mas present.

Unfortunately, I didn't contact Vanguard until AFTER the original check had been cut by the bank. They advised me to do the same as everyone here; i.e., ask the bank for a re-do.

As far as my pressure, I emailed their customer service address (and was prepared to email the president/CEO); but they stepped right up and made it right.

 

[zippy2020]

I believe that the bank did not offer the OP/brother any options because that is considered "investment advice" and they are not clients of the brokerage arm (of the bank).

To the bank, the heirs have the right to request distribution of inherited funds as they wish. The bank should not advise them "oh, you should do it THIS way instead of THAT way," unless they are clients of said bank.

We encountered this kind of situation periodically when I worked at an independent CFP firm. A client died and the CFP was very detailed with the heirs (only one of which became a client; the others chose not to be) on the procedure for setting up individual Inherited IRAs with the firm/bank of their choice.

The second biggest error people make, after the first big mistake in ordering a check for the proceeds, is to put the money into their personal IRA, e.g., under their name. NO NO NO NO NO.....we told people, it has to specifically be titled Inherited IRA, and kept separate from your personal IRA.

The IRS is heavy-handed about IRA rules. When I was still in training I set up an Inherited IRA with a very small mistake in the title, and it was a mad scramble to get it reversed within a 24-hr period! Needless to say, it made a permanent impression on me )

 

[pb4uski]

I believe that the bank did not offer the OP/brother any options because that is considered "investment advice" and they are not clients of the brokerage arm (of the bank).

To the bank, the heirs have the right to request distribution of inherited funds as they wish. The bank should not advise them "oh, you should do it THIS way instead of THAT way," unless they are clients of said bank. ....

I disagree. The bank can tell them what there options are and explain the implications of each... that is not giving advice.... just letting a beneficiary know what their options are.

To try to flavor the explanations to steer the beneficiaries to a particular option would be giving advice.

 

[jpeter1093]

I disagree. The bank can tell them what there options are and explain the implications of each... that is not giving advice.... just letting a beneficiary know what their options are.

To try to flavor the explanations to steer the beneficiaries to a particular option would be giving advice.

I'm the OP; one of their excuses for making the checks out to us originally and balking when we asked for a redo; was that they are not financial advisors. I do agree that they should have told us available options and the ramifications of each. I'm sure if I could somehow contact their back room retirement operations folks; they would have offered me that advice.

 

[wolf]

I'm the OP; one of their excuses for making the checks out to us originally and balking when we asked for a redo; was that they are not financial advisors. I do agree that they should have told us available options and the ramifications of each. I'm sure if I could somehow contact their back room retirement operations folks; they would have offered me that advice.

The fact, Vanguard, did a "redo", proves, this is a "gray" area. Or they did make a mistake. Otherwise, why did Vanguard end up doing a redo.

In any case. Thanks OP. This is valuable information, all of us.

 

[Sunset]

The fact, Vanguard, did a "redo", proves, this is a "gray" area. Or they did make a mistake. Otherwise, why did Vanguard end up doing a redo.

In any case. Thanks OP. This is valuable information, all of us.

Vanguard did NOT make the mistake, it was a bank, and Vanguard helped OP by suggesting OP ask the bank for a redo of the checks.

 

[zippy2020]

It isn't my intention to beat a dead horse to death, but I feel I should clarify my thinking on my post.

Much depends on WHO in the bank the OP was talking to about the disbursement checks. The distinction is important. If the OP/brother were talking to someone on the financial investment side, with broker licensing, then YES they can tell a customer about disbursement options (assuming they know what they are).

But I believe that lacking a broker license, any other bank employee is NOT allowed to discuss disbursement options. I cannot imagine any financial institution allowing such a flagrant error. There is a very strict legal line drawn between investment banking (which is brokerage operations) and account operations. IB units have operational admin people (the people who open/close accounts, order checks, etc.), but they are NOT brokers and under no circumstances would they be allowed to discuss inheritance disbursement tax issues.

I freely admit I may be wrong - I have been out of the investment/admin end for a decade. But I try to keep up with general rule changes, and I can't recall any alteration mentioned in SEC regulations that would change that basic premise.

FWIW.

 

[jpeter1093]

Vanguard did NOT make the mistake, it was a bank, and Vanguard helped OP by suggesting OP ask the bank for a redo of the checks.

That's correct.

 

[lauradrops]

When my Dad passed in 2018 he had an IRA at a bank in CDs and an annuity in an IRA. The bank didn't understand that I could move it into an inherited IRA and kept insisting I had to take a check and go.

My father had my brother and myself as equal beneficiaries. My brother had passed in 2016 and Dad never revised beneficiary info. I had to walk the bank through the process and finally had the entire account transferred into an inherited IRA account. At least they were able to put 100% to surviving beneficiary.

The annuity understood the process, but would not put it all to surviving beneficiary. They moved my half to the inherited IRA and forced the other half to sell and go into the estate. This is unfortunate because I would have preferred not to do this.

So while my advice may be obvious to most, I will give it anyway.

Have a will that is easily located.
Destroy any old wills, they can cause headaches.
Know how your investment sees beneficiaries that have passed and don't assume it all goes to surviving beneficiaries.
Update wills and beneficiaries as necessary.
Always educate yourself before making a financial decision that is irreversible.
And last but not least, don't ever assume a financial institution knows how things are best done and all the options available to you.