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Bill
Bill, Enrolled Agent
Category: Tax
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Experience:  EA, CEBS - 34 years experience providing financial advice
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My husband ha an IRA Account with Morgan Stanley. My husb ...

Customer Question

My husband ha an IRA Account with Morgan Stanley. My husb was 88 yrs old in 2007. According to Morgan Stanley he should have received a payment of $636.72 in 2007. Morgan stanley didn'' pay therefore it wasn''t filed with you. My husband''s only iincome for some time was Social Security and an annuty income from the Post. We had no tax liability. Onlly filed in 2007 to recieve the free money. Please advise. what I should do. My husband expired, June 3, 2007    My husband''s name: Walter Robert. Burks, social security #XXX-XX-XXXX, My S.S. #XXXXXXXXX : your immediate response will will be apprediated. Elizabeth Evangia Burks
Submitted: 6 years ago.
Category: Tax
Expert:  RD replied 6 years ago.

This would be the required minimum distribution that should have been taken out of the IRA account. Why did Morgan Stanley not distribute this amount?

Customer: replied 6 years ago.
Reply to RD's Post: I don't know why Morgan Stanley did not pay My husband's IRA payment. The Morgan Stanley representive whom I spoke with today didn't know either. He only told me $636.72 should have been paid.
Expert:  Jesse Handel replied 6 years ago.

Hello Mrs. Burks. Thank you for coming to Just Answer so that we can help you with your question. RD had to go to a meeting and gave me permission to work with you.

The money that Morgan Stanley should have paid you in 2007 was the amount of money that the IRS requires anyone over 70.5 years old to take out of their IRA each year. Since your husband expired in 2007, you inherited his IRA (unless he willed it to someone else). I would expect that is why Morgan Stanley didn't send you the payment. If you are over 70.5 years old, then Morgan Stanley will need to make a payment to you.

Since I don't know the specifics of your husband's estate, there is little help that I can give you. Was there an executor for your husband's estate? Did someone help you with your taxes in 2007? You will probably need to have an amended return prepared for 2007 and you need to discuss this with someone in person that can look at the papers and prepare papers for you. If you have a lawyer or tax preparation person that is already familiar with your situation that would be best. If your husband had an executor, that person may be able to help you find a reputable CPA, lawyer or tax preparer. If you can't find anyone else that you are already connected to or recommended to, call your local H&R Block office and ask for an enrolled agent to work with you.

I'm sorry about your loss and if you can't find a person to work with you, I will try to get a recommendation for someone in the Roanoke area (I know people that live there). This situation is complex enough that you need to deal with someone face-to-face. Let me know if you need further help.

I spoke with a person I know in Roanoke that is connected with the legal community. If you or the executor of your husband's estate can't find a lawyer or CPA that you've already worked with, contact the firm of "Plunkett and Oehlschlaeger" in Roanoke. Deborah Oelschlaeger specializes in estate planning and estate management. She works with a CPA firm that can help you correct your tax papers. She's very trustworthy and can help you with your financial and tax problems.

Good luck and I hope this helps.

Expert:  Bill replied 6 years ago.

If you were the beneficiary on your husband's IRA, you should correct the missed required minimum distribution (RMD) by taking the distribution this year. There is a 50% penalty for not having taken the distribution last year. However, you can request that the IRS waive the penalty if it was due to reasonable error and if you rectify the error (which you would do by taking the distribution this year). The distribution that you take this year will be included on your 2008 tax return (if you are required to file). You can file Form 5329 to report the penalty and attach a statement of explanation requesting that the penalty be waived. You will not have to file an amended return. The IRS usually waives the penalty if all of the required procedures are followed. The IRS links below provide the details for correcting this problem. Most tax preparation firms should be able to assist you in preparing these forms.

See page 57 - http://www.irs.gov/pub/irs-pdf/p590.pdf

See page 6 - http://www.irs.gov/pub/irs-pdf/i5329.pdf

Customer: replied 6 years ago.
Reply to Jesse Hand's Post: Sorry, I can't except your reply at this time. I talked with Morgan Stanley today. They have to look into this matter to see what happpened to the distribution amount and according to them I possibly will have to con IRS. Thanks for trying. Wilcontact you later if necessary.

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Bill
Bill
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EA, CEBS - 34 years experience providing financial advice