Resolving Financial Missteps: Restoring Over $600,000 in an Inherited IRA and Abating $300,000 in Tax Deficiencies Through Strategic Litigation

By, John M. Goralka
Sacramento, CA

Client inadvertently transferred funds (over $600,000) in an Inherited (IRA) Individual Retirement Account to an unqualified account. This result triggered ordinary income in an amount to the total amount withdrawn. Client was not aware of the tax assessment and deficiency until receiving a 1099 the following year. That resulted in over $300,000 in tax plus penalties and interest. We were able to suspend billing from the Internal Revenue Service (IRS) and the Franchise Tax Board ( FTB) until we resolved our claim against the financial institution managing the plan. After litigation, we were able to compel the return of all of the funds to the qualified retirement account except for the amounts that should have been received as required minimum distributions. We were also able to compel the financial firm holding the funds to pay our fees at the conclusion of the litigation. With the funds returned, the tax deficiencies were abated by the IRS and the FTB. The Client’s family was put back into the same position as if the improper withdrawal never occurred.

Sacramento Estate Planning, Tax Planning and Business Attorney.

I’m John Goralka, a Sacramento Estate Planning, Tax Planning and Business Attorney at the Goralka Law Firm, P.C. If you have an estate, tax or business situation needing legal help, contact our team for experienced and friendly advice. You can contact us at 916-440-8036. Alternatively, you can use our convenient online contact form here on our website. We listen, and you can have your questions answered, your case evaluated, and explore your options for getting the legal help you need.

There are almost 200,000 attorneys in the state of California, and fewer than 100 of those attorneys are State Bar Specialists in Estate Planning, Trusts and Probate and State Bar Specialists in Taxation. I am one of the few attorneys with both critical specializations. I passed the California CPA examination and am a former income tax auditor and hearing officer. I am also recognized as a top attorney in the United States by US News and World Reports and by Best Lawyers and hold an AV rating from Martindale which is the premiere rating organization for attorneys. The AV rating is the highest possible rating for legal experience and for legal ethics.

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