Owner of Bene IRA dies, then what?
We have a situation where a person had an inherited IRA and she passed away. Her husband is listed as the beneficiary of the bene IRA. The custodian, Schwab, says that the husband can roll over the bene IRA to his own bene IRA and stretch the payments. I spoke with an IRS agent and he said that the husband must take the entire lump sum from the bene IRA and pay taxes. Can anyone shed some light on this situation for me? Thanks in advance.
Steve
Permalink Submitted by Alan Spross on Tue, 2008-04-01 21:58
They may both be wrong, but first please clarify what the decedent’s relationship was to the original IRA owner at decedent’s death.
Permalink Submitted by Steven Elwell on Wed, 2008-04-02 12:32
The orginal IRA owner passed away and her daughter was the beneficiary. Now the daughter has passed away and her husband is the beneficiary of her bene IRA.
Permalink Submitted by Al Fry on Wed, 2008-04-02 13:52
Alan is correct, they are both wrong. The husband CAN take a lump sum, or can continue RMDs based on his deceased wife’s remaining life expectancy. This is presuming his wife was doing a stretch, not a 5-year deferral.
Permalink Submitted by Steven Elwell on Wed, 2008-04-02 14:19
The wife was doing a stretch based on her life expectancy. The husband would like to stretch the payments over his life expectancy. Do either of you know of any publications or documentation in the tax code that explain in writing what you have just told me? Thanks to both of you.
Steve