IRA disclaimers
Can the beneficiary of an inherited IRA disclaim that asset and name another benefiary in his place. If so, does he have to do this within timeframe for it to be effective?
Can the beneficiary of an inherited IRA disclaim that asset and name another benefiary in his place. If so, does he have to do this within timeframe for it to be effective?
Permalink Submitted by Jose Morales on Thu, 2010-09-02 15:42
One of the requirements for a valid disclaimer is that the disclaiming party cannot direct who the remaining assets will go to. If a person disclaims the remaining assets will be inherited evenly by all remaining primary beneficiaries. If there are no other primary beneficiaries then they will be divided evenly by all contingent beneficiaries. If there are no contingent beneficiaries then you will need to check the plan documents to determine who is the default beneficiary (possibly the estate of the deceased).
Permalink Submitted by Alan Spross on Thu, 2010-09-02 19:15
Since the beneficiary cannot re direct the IRA to the person he wants, one solution would be to NOT disclaim, take RMDs or other distributions, and gift the net of tax amount to this person. The annual exclusion is presently 13,000 per year. Of course, if the named beneficiary is in a much higher tax bracket, there will be a larger amount lost to taxes than if the other person had been named as beneficiary.