Non-spouse beneficiaries problem
Mother, 53, dies 1/2003 and leaves a traditional IRA with her 2 sons as beneficiaries. Nothing has been done since the date of death.
Must the entire account now be distributed by 12/31/2008, OR is there some retroactive act that can be done to elect to take distributions now as if they were taken over the lifespan of the beneficiaries beginning back in 2003?
Note: the executrix of the Mother’s estate was negligent in handling the inherited IRA.
Bottom line… what are the options at this late stage?
Permalink Submitted by Bruce Steiner on Thu, 2008-12-18 15:35
Since the sons were the beneficiaries, the executor had nothing to do with it other than to report it on the estate tax return and perhaps to tell the sons how much their Section 691(c) deduction would be, though it would have been nice if the attorney handling the estate for the executor had advised the sons as to their choices.
Neverthless, the sons’ attorneys may want to take a look at whether PLR 200811028 might apply to salvage the situation for the sons.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL
Permalink Submitted by Alan Spross on Thu, 2008-12-18 17:44
You will note that the PLR Bruce cited involved the payment of the excess accumulation penalty, which would be 4 years worth in this case, in return for saving the lifetime stretch. This may not be too bad if the sons are young enough.
OR – perhaps the sons inherited the IRA through the estate. IF the estate were either the named or default beneficiary, then they are stuck with the 5 year rule and the IRA needs to be distributed by year end 2008.
Here is an article by Ed on this PLR:
http://www.financial-planning.com/asset/article/613061/saving-stretch.html