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Asked 1/2/2008

Suit over financial advice

My sister and I inherited Dad's IRA. It was with Prudential Financial. At that time, the agent told us that we had no option but to take our halves of the IRA as a lump sum and pay all the taxes on that $ on this year's return. Based on his advice, the $ was placed into Prudential checking accounts in both our names.

A tax attorney later told me the Prudential agent had given me the worse possible advice. Federal law allows me to take the IRA as an inherited IRA and pay taxes on yearly dispursements over my lifetime.

I requested Prudential undo the process and that my Prudential checking account be converted to an inherited IRA. They have refused to do so even though the $ has not left the company. They maintain that once the money is converted it is impossible to go back.

This will probably cost me $30k in taxes. Can I sue Prudential for the damages this agent's bad advice has cost me?

 
 
 
 
 
Answers

Answer 1/2 - Submitted 1/2/2008

Yes, that is the worst advice you could have taken. And once it was taken out, there is nothing that they can do to put it back into the IRA.

I don't know if you have grounds to sue, but asking a lawyer that could be a good idea, since you are looking at paying $30k in taxes for just that amount alone.

 
 

Answer 2/2 - Submitted 1/2/2008

Yes absolutely! The problem with using financial agents at a place like Prudential is that their pay is commission-based and most people assume that like a CPA, they are just people who know the rules and will tell you the BEST solution, when that is not true at all.

I would take them to court as this was pure negligence on the agents part and from now on if you have to deal with a situation like this get a second opinion from a non-commissioned financial planner or a CPA. Good luck.

 
 
 
 
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