Any CPA or Attorney familiar with Estate closing paperwork.
pearsall001
Posts: 5,352
I'm the Executor for my sister's estate. Everything is done & the paperwork is in my CPA's hand. He called me & said he found an issue with the way her federal TSP IRA (Thrift Savings Plan) was distributed. Since I am named as her beneficiary the proceeds should have come directly to me. But the TSP deposited the funds minus taxes directly into her Estate account. He feels we might need a attorney to deal with this. Is this really a big deal? Is there a clear solution for this? That is the only holdup right now.
Comments
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Do you not have a probate attorney engaged already? I think they would be the one to submit final dissolution/etc. to the court for approval anyway. I think as long as the funds flow shows the IRA money getting to you eventually, it would be considered reasonable."This may not matter to you, but it does to me for various reasons, many of them illogical or irrational, but the vinyl hobby is not really logical or rational..." - member on Vinyl Engine
"Sometimes I do what I want to do. The rest of the time, I do what I have to." - Cicero, in Gladiator
Regarding collectibles: "It's not who gets it. It's who gets stuck with it." - Jimmy Fallon -
Not a CPA or attorney, but the TSP folks provide lots of information on handling distributions following a participant's death to beneficiaries, and like a lot of things there are bureaucratic procedures that have to be followed. There are time limits on taking actions because of legal requirements and it takes time to process account transfers, assuming the correct beneficiary form was on file in your sister's TSP account. You may already be aware of this site:
https://www.tsp.gov/death-and-beneficiary-support/reporting-a-participant-death/ -
Do you not have a probate attorney engaged already? I think they would be the one to submit final dissolution/etc. to the court for approval anyway. I think as long as the funds flow shows the IRA money getting to you eventually, it would be considered reasonable.
No attorney involved. I handled the probate myself. Everything was fine except for this one issue. The Estate is done all for the tax filing.
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Not a CPA or attorney, but the TSP folks provide lots of information on handling distributions following a participant's death to beneficiaries, and like a lot of things there are bureaucratic procedures that have to be followed. There are time limits on taking actions because of legal requirements and it takes time to process account transfers, assuming the correct beneficiary form was on file in your sister's TSP account. You may already be aware of this site:
https://www.tsp.gov/death-and-beneficiary-support/reporting-a-participant-death/
Yes I am very familiar with TSP. I was in contact with them on a few occasions & sent them all paperwork & documents they requested. During the entire probate process all documents I sent were sent certified mail to all companies & I received the signed delivery receipts. They did get back to me (they work at a snails pace) & confirmed that I am the legal beneficiary & executor for the Estate. They just went ahead & deposited the funds minus taxes directly into the Estate account. I didn't even know they did that until I saw it on the Estate monthly statement. This is the issue the CPA is concerned about. Everything else is fine & ready to close out the Estate. Hopefully this isn't a big issue to deal with. -
From an accounting perspective, it seems like it would be six of one, half a dozen of the other whether it flows to you through the estate or directly to you.
Is he concerned about income tax implications? If you have a tax professional, they might be worth reaching out to.
Brian -
If you didn’t have any claims against the estate, I wouldn’t get an attorney involved at this point if you can help it. They will find ways you cannot imagine to suck the dollars and the life out of you.
Brian -
If you didn’t have any claims against the estate, I wouldn’t get an attorney involved at this point if you can help it. They will find ways you cannot imagine to suck the dollars and the life out of you.
The estate is settled just need to file the taxes & pay the inheritance tax. This one issue just popped up. I'm contacting another CPA to see what he says. I know getting a attorney involved at this stage isn't what I'm looking to do. Never a dull moment. -
It’s great, isn’t it? My FIL passed away May 14, 2023. We are no closer to settling his estate than we were the day after he died three years ago, but we sure have been cranking out the checks to the attorney. Worst experience of my life, by a long shot.
Brian -
It’s great, isn’t it? My FIL passed away May 14, 2023. We are no closer to settling his estate than we were the day after he died three years ago, but we sure have been cranking out the checks to the attorney. Worst experience of my life, by a long shot.
OMG! Brian, that's the same day my sister passed but in 2025, May 14. I can't believe it will be a year this coming Thursday. I thought for sure that this ordeal would have been over by now but no such luck. I can't believe you've been at it for 3yrs. You would think that they would make it a speedy process because all they want is the tax money. Unless of course attorneys devised the process to keep things going?
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Definitely following along on this. Sorry you're having some issues Phil, hope it gets resolved soon.So, are you willing to put forth a little effort or are you happy sitting in your skeptical poo pile?
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From an accounting perspective, it seems like it would be six of one, half a dozen of the other whether it flows to you through the estate or directly to you.
Is he concerned about income tax implications? If you have a tax professional, they might be worth reaching out to.
From what I understand about how the TSP works, the agency establishes a temporary 90 day account for a beneficiary and the beneficiary has to act to take the money out of the account within that timeframe or it gets an automatic distribution to the estate and the account is closed. The CPA involved may be seeing some differing tax implications but likely water under the bridge now. Taxes will be owed on the distribution at some point one way or the other and it can be a hefty amount. I think the standard for the TSP is still to deduct 20% from any distribution for Federal taxes but the actual tax owed by the beneficiary may be higher or lower.
If someone has a lot of money in the TSP, and they can do advance estate planning before they pass, there are some ways of avoiding some of the tax implications for beneficiaries. A tax professional can definitely help with advice on this. -
I don’t know if TSP IRAs are any different, but most inherited IRAs fall into a 10-year period where RMDs are required to draw it down entirely by the beneficiary. I’m guessing this is what the CPA is concerned about. At the end of the day, if they did something they shouldn’t have, the financial institution that held the IRA should be able to reverse the transaction, if needed.
Keep us posted, Phil!
Brian -
The distribution rules should be the same since they're IRS taxation rules driving TSP procedure. Definitely better in most cases to have a draw down period if possible.
