A 72 year old relative of mine recently died leaving me $20,000 worth of his IRA. I assumed that I could sell the underlying stock and get the money without the early withdrawl penalty. The IRA is still controlled by the deceased's stockbroker and he informed me over the phone that I have to wait until I am 59 myself to withdraw the money without penalty. Is this correct?
TIA
No.
In fact the broker will report the distributions, of which you must take at least as much as he would have taken since mandatory distributions have begun, wih a Code 4 or 7 on Form 1099-R Box 7. That tells your tax preparer and the IRS that an early distribution penalty does not apply.
If you took your broker's advice and didn't take any money out until you reached 59 1/2 you'd be in trouble.
The executor of the estate should transfer the name of the account from deceased relative to you, and you and not the broker should control the account. If not, and if you were a named beneficiary on the account, you should write to the stock brogerage firm, not the individual broker, and ask for the name change. They might require certain forms which the executor can help with.
What stock broker gives tax advice? I know of none, nada, zilch. "Controlled by...stockbroker"? As in trading authority or what?
arthur
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