Non beneficiary designated
Mother dies naming her estate as the beneficiary. Will names 4 children to inherite her assets.
I thought that the executor now had the right to set up inherited IRA after death so each of the four could individually choose to stretch or take the cash.
Custodian is uneducated and wants the tax code or reveune ruling as proof.
Any guidance? Or are we stuck with 5 year payout?
Ps. Mother was advised to add beneficiary and choose not to.
Permalink Submitted by Alan Spross on Thu, 2008-02-21 05:49
Although the estate can be terminated and the IRA interests assigned to the beneficiaries, this unfortuneately does not change the fact that the estate was the actual beneficiary and an estate is NOT a designated beneficiary by definition.
If mother passed prior to her RBD, then the 5 year rule applies to the IRA whether separate accounts are established or not. If she passed after her RBD, then her remaining life expectancy in the year of death can be used.
Whoever told the mother that it was better to name the estate (or not name any beneficiary) gave extremely bad advice.
Ref IRS Pub 590, p 37 – “Beneficiary not an Individual”