Compliance Question of the Week

If a member inherits funds from his mother’s traditional IRA, can the member “roll over” the inherited funds from the mother’s account into a new IRA account?

No. The funds paid to the member would be considered a “distribution” included in their gross income and would not receive the tax considerations given to rollover funds. This happens when the member is a beneficiary of an “inherited account”, which is defined as an account that:

  • Was maintained for the benefit of the beneficiary and is acquired due to the death of another individual.
  • The inheriting individual was not the surviving spouse of the individual who set up the IRA.

Only the spouse of the deceased has the option “roll over” an IRA into one of their own or receive distribution of the deceased’s IRA.

Related Links

26 USC 408(d)(3)(C)

Interested in learning more?

The Northwest Credit Union Association (NWCUA) is hosting a two-day IRA Seminar in October to give credit union professionals a solid foundation of IRA knowledge. Day one of the training is a beginner’s session and assumes no previous IRA knowledge, while the second day builds on the IRA basics to address the more complex IRA issues facing credit unions.

The IRA Seminar will be held in three times in three different locations in October, beginning with Oct. 23-24 in Portland, Ore. The same training will then be held Oct. 25-26 in Federal Way, Wash., and Oct. 29-30 in Spokane, Wash. Registration options are available for one or both days of the seminar. More details can be found online.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, Federal.