Multiple beneficiaries
I’ve received conflicting information regarding an IRA that has multiple beneficiaries. Can each beneficiary use their own life expectancy for the stretch or do they have to use the oldest beneficiaries age? What if one of the beneficiaries is a charity?
Permalink Submitted by Alan Spross on Fri, 2007-11-09 21:22
The presence of a charitable beneficiary beyond 9/30 of the year following death will destroy the stretch for all the beneficiaries. Therefore, the charity must be cashed out prior to that date in order for it not to be considered a beneficiary.
With respect to individual beneficiaries, the life expectancy of the oldest will apply to all of them unless separate accounts are created prior to 12/31 of the year following death.
Therefore, a beneficiary that finds himself in this situation still has the potential to resolve the problem positively, if they can work with the charity and meet the other time requirements. However, note that the separate account rules do NOT apply to a trust beneficiary.
Permalink Submitted by Al Fry on Fri, 2007-11-09 23:15
Suggestion: The IRS does its best to try and confuse us with 3 different dates. As Alan says, 9/30 is Bene designation date and 12/31 is separate account date. Then there is Haloween (10/31), the deadline for furnishing any trust documentation to the custodian. I think it is wise to use the 9/30 date for all three, just to be safe. Time flies, and there always can be screw-ups that take time to straighten out, especially when dealing non-brick and mortar custodians.