Inherited IRA: Titling
I recently received notification of the titling of my inherited IRA.
It is titled as follows: Client’s Name (DEC’D) C/O Beneficiary’s Name
The client was my father, the IRA owner who is deceased. The Beneficiary is me.
1) The client’s name is missing the generational suffix (Jr.). My brother shares this name and has the generational suffix – III. I’ve seen several versions of the client’s name on my dad’s IRA paperwork. Last year’s 1099 included “Jr.” Is it a problem that the client’s name is missing the generational suffix?
2) Is C/O vs. FBO a problem? I asked the institution to which I expect to do a trustee-to-trustee transfer (Vanguard) in the near future and they said that C/O would suggest that I am not a beneficiary, but rather that I am handling this account on the client’s behalf.
Thanks.
Permalink Submitted by Alan Spross on Fri, 2009-09-25 19:50
1) The suffix should be corrected, but not likely to cause a problem as long your SSN is correct, and as long as Vanguard will accept the transfer.
2) I agree with Vanguard. There are various generally acceptable title formats, but c/o is not one of them. FBO is not required either, the title could just show “owner, deceased, yout name, beneficiary or “your name, as beneficiary of owner”. If Vanguard will not accept the transfer, then you must get the current custodian to title the IRA in a format Vanguard will accept.
Permalink Submitted by Kimberly Crocker on Fri, 2009-09-25 21:13
Thanks for the reply.
Regarding your response:
1) The suffix should be corrected, but not likely to cause a problem as long your SSN is correct, and as long as Vanguard will accept the transfer.
Whose SSN is supposed to be associated w/ an inherited IRA (in my case we split my Dad’s IRA equally between 4 non-spouse beneficiaries)? The beneficiary’s or the deceased account owner’s? I ask because the IRA application requested only my father’s SSN, not mine.
Permalink Submitted by Alan Spross on Fri, 2009-09-25 23:09
When you provide the IRA custodian with the death certificate, the IRA account will be re titled in inherited form, which can vary somewhat between firms. The beneficiary’s SSN (or TIN) then is assigned to the account. Separate accounts can also be created at this time for each beneficiary. If done prior to the end of the year following owner’s death, each non spouse beneficiary can then use their own non recalculated single life expectancy for RMDs. If separate accounts are not created or created after the deadline, then the age of the oldest beneficiary must be used.
A 1099R will be issued in the appropriate SSN showing distributions each year. Note that if your father ever made non deductible contributions to the IRA and filed Form 8606, then any unused basis will pass to the beneficiaries. This will make some of your distribution tax free. I suggest you check with his tax preparer or in his tax or IRA records to determine if there was any remaining basis. You would then file an 8606 with your return to show the portion of basis you inherited when you report your distributions.
Remember that 2009 RMDs have been waived.
Permalink Submitted by Kimberly Crocker on Fri, 2009-09-25 23:15
Thanks for your assistance.