IRA beneficiary predeceased IRA owner
An IRA owner named two primary beneficiaries (no secondaries) with each receiving 50%. Now the IRA owner is deceased and it turns out one of the beneficiaries pre-deceased him. What happens to the deceased beneficiary’s share? Does it go to the estate of the IRA owner?
Permalink Submitted by mk foss on Thu, 2009-04-23 20:13
The IRA custodial agreement is what determines the answer to this question. Many agreements specifiy that the IRA owner’s estate becomes the beneficiary if there is no beneficiary or if the beneficiary has predeceased. You’d have to check the agreement to see if it addresses this specific circumstance. If it does not, you may need to consult the legal department of the custodian to see how they interpet their agreement with this fact pattern.
Permalink Submitted by Linda Randazzo on Mon, 2009-04-27 21:34
I know i am not the IRA expert here but i do have a thought. Since one of the primary benes passed first, i believe under any plan that the deceased bene is out of the picture as far as funds to their estate. I believe since there is a surviving primary bene the funds would default to this bene. Yes certain plans do have default benes if there are none named or benes predecease the owner. But since there is a surviving primary i am pretty sure the funds would belong to the surviving bene. Am i way off base? It’s ok, i can take it! 🙂
Permalink Submitted by Alan Spross on Mon, 2009-04-27 22:32
In many cases, you would be correct. Schwab and Vanguard direct the proceeds to primary beneficiaries who survive the account owner, should not all primary beneficiaries survive the owner, and there were no contingent beneficiaries named for any deceased primary beneficiaries.