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Speaking ‘Personally’ About Inherited IRAs

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in Small Business Tax

Q.  In 2001, my wife inherited an IRA and set up an account with a national bank. Recently, the bank insisted that she open a brokerage account under her own name (not in the name of the inherited IRA). Will this affect its tax status?

A.  Probably not. This appears to be an administrative matter which may differ among financial institutions. In fact, the change may be related to a revised internal policy. As long as the overall account continues to be treated as an IRA, however, it will have no impact on the tax status.

Tip: Nevertheless, if you are uncomfortable with the bank’s policy, you may consider including a tax-free, trustee-to-trustee transfer of funds to a different financial institution.

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