Death of IRA owner and primary beneficiary
Setup: Roth IRA owner is father, sole primary beneficiary is mother, and adult son is sole contingent beneficiary. Father dies January 2011, mother dies February 2011. Mother did not disclaim, convert to her own Roth IRA or set up beneficiary IRA. Son wishes to continue the Roth IRA tax-free buildup, (subject to non-spousal beneficiary distribution and conversion rules) but it appears the assets should be distributed to mother’s estate. Is there a way for son to have the assets in a Roth beneficiary IRA?
Permalink Submitted by Alan Spross on Fri, 2011-04-01 21:01
Mother’s executor should contact estate counsel to determine if a post mortem disclaimer can be filed with respect to mother’s interest in the IRA. If successful, the son would be considered the designated beneficiary of the father’s Roth IRA and could stretch RMDs over his life expectancy.
Otherwise, the surviving spouse would be treated as the owner for RMD purposes but since she did not name a beneficiary, her estate would be the beneficiary, and since a Roth owner is deemed to pass prior to their RMD, the estate beneficiary would have to drain the Roth within 5 years.
Permalink Submitted by Bruce Steiner on Mon, 2011-04-04 01:25
If mother’s executor disclaims, it will be treated as passing to son. Whether this is beneficial depends, among other things, on whether there is an estate tax benefit by having it pass from father to son (in which case it will not qualify for the marital deduction in father’s estate), or from father to mother (in which case it will qualify for the marital deduction in father’s estate but be included in mother’s estate).
In some states, a disclaimer by an executor requires court approval, but it should be possible to obtain court approval if the ultimate takers are the same either way, or if the adversely affected beneficiaries consent.
The lawyer(s) handling the estates should be proactive on this.