Yes, the trustee’s decision to place the IRA funds in a savings account will have tax implications, although we are not qualified to address exactly what those tax implications will be. Generally, when an IRA is distributed to a beneficiary, the beneficiary must roll over the distribution into a new IRA within sixty days of the IRA distribution. Here, the trustee failed to roll over the IRA distribution into a new IRA, since he placed the funds into a non-IRA savings account, so it appears that the entire distribution will be taxable.

For resources related to our guidance, please see:

• IRS Publication 590-A, Time Limit for Making a Rollover Contribution (“You generally must make the rollover contribution by the 60th day after the day you receive the distribution from your traditional IRA or your employer’s plan. . . . In the absence of a waiver, amounts not rolled over within the 60-day period don’t qualify for tax-free rollover treatment. You must treat them as a taxable distribution from either your IRA or your employer's plan. These amounts are taxable in the year distributed, even if the 60-day period expires in the next year. You may also have to pay a 10% additional tax on early distributions as discussed under Early Distributions in Pub. 590-B.”)