estate as ira beneficiary
Dad dies after RBD, with IRA naming estate as beneficiary.
Dad’s will leaves estate to 3 adult children, in equal shares.
1 child wants lump sum payout, others want to defer (I believe they can defer it over Dad’s remaining life expectancy since he died after his RBD, but please advise if my understanding is wrong).
Estate’s attorney (estate is in PA) is advising that he would have to pass the IRA through the estate and then to the children.
Cannot the executor ignore the estate for purposes of distributing the IRA directly to the children? Wouldn’t this be the better way to go than going through the estate, especially for the children who want to continue to defer? If the executor can do so (ignore the estate by directly assigning the IRA benefits to the children), does he need court approval to do so)?
Permalink Submitted by Alan Spross on Fri, 2008-03-07 05:44
Normally, he should not need court approval, however there may be a few jurisdictions around where this would be necessary. It would be to everyone’s advantage here, except the few collecting fees, to have separate accounts set up for each beneficiary and to find an IRA custodian who will do that. The account should be directly transferred to that custodian if necessary.
Your understanding is correct about the RMD for the estate or it’s beneficiariaries, and separate accounts would not create a longer stretch, but would have several other advantages.
See att’d:
http://www.ataxplan.com/bulletinBoard/ira_providers.cfm