charity as contingent beneficiary
I have a client that has named his son as primary beneficiary of his ira. As contingent beneficary, he has named a number of different charities. If he dies and his son inherits the IRA, is his son able to take a required minimum distribution each year based on his life expectancy? Or does it become an issue that a non-individual (charity) was named as a beneficiary (even though it was a contingent beneficiary)?
Permalink Submitted by Alan Spross on Thu, 2010-09-02 19:18
Contingent beneficiaries do not affect the RMD of the primary beneficiary unless a partial disclaimer is executed. For example, if the son disclaims half the IRA to the charities AND the charities have not received a total distribution of their share by Sept 30th of the year following client’s death OR if the son has not created a separate account by the end of that year, the son could lose his stretch and even become subject to the 5 year rule if client passed prior to his RBD.