ira
If an estate is the primary beneficiary of an ira, can it disclaim? If it does, can the contingent beneficiaries set up inherited iras and take rmds over thier life expectancies?
If an estate is the primary beneficiary of an ira, can it disclaim? If it does, can the contingent beneficiaries set up inherited iras and take rmds over thier life expectancies?
Permalink Submitted by mk foss on Thu, 2010-02-04 21:27
An estate cannot disclaim an IRA, you need a person to do that. A probate proceeding will include the IRA assets when the IRA is a beneficiary.
I’ve never seen contingent beneficiaries when the estate is a primary benenficiary; contingent beneficiaries are only considered if there is no primary beneficiary at the date of death. In order to use life expectancies the contingent beneficiaries would have to be named as primary beneficiaries or benefit from a disclaimer by a primary beneficiary with a life expectancy.
Permalink Submitted by atle foss on Sat, 2010-02-06 22:18
Even though the ira will be included in the estate for federal and state estate purposes, in Washington state the personal representative can disclaim within 9 months of the decedent’s death. In this case, the decedent early in his career named his estate the beneficiary of his ira and his three children from a previous marriaage as contingent beneficiaries. I’m thinking the personal representative should disclaim. Technically then, the proportionate inherited ira passes directly to the children and should allow them to receive rmds based on thier life expectancies. What do you think?
Permalink Submitted by Alan Spross on Sun, 2010-02-07 00:33
While estate disclaimer statutes may vary from state to state, one potential problem here is that the IRD Final RMD Regs require that disclaimers qualify under Sec 2518 of the tax code. To meet 2518 requirements, only a spouse can disclaim interests to themselves. So what happens if the estate beneficiaries are the same as those named as contingent beneficiaries on the IRA agreement?
Does WA statutes address that situation?
Permalink Submitted by Bruce Steiner on Sun, 2010-02-07 04:40
If an IRA owner leaves his IRA to his estate, his executors can’t disclaim it.
But if an IRA owner leaves his IRA to someone else, and the beneficiary dies soon after the IRA owner’s death, the beneficiary’s executors may be able to disclaim the IRA on behalf of the deceased beneficiary. In some states, the beneficiary’s executors need court approval to do so.