Estate rollover IRA to beneficaries
Both spouses died – no contingent beneficiary named.
Executor would like to roll over to beneficiaries so that they can use life expectancy. There have been PLRs issued on point. Has IRS issued any guidance on this issue?
Jim M.
Permalink Submitted by Alan Spross on Thu, 2012-01-26 21:22
There are a number of positive rollover rulings for surviving spouses, but none for non spouses. If the estate was the default beneficiary on the IRA, the only options for non spouse beneficiaries under the will are the 5 year rule if IRA owner passed prior to RBD or the owner’s remaining life expectancy if death was on or after the RBD.
The IRA can still be transferred out of the estate to the beneficiaries under the will so that they can have separate inherited IRAs, but this will not change the RMD options above.
Permalink Submitted by JAMES MAGNO on Fri, 2012-01-27 15:11
Thank you Alan!
The main issue here is the lack of cooperation from the financial institution. I found a Mike Jones article in Ed Slott’s July 2006. Jone’s suggests referencing Rev Rul 78-406 if the custodian balks at retitling the IRA as an inherited IRA FBO beneficiar(ies).
PLR 200343030 – supports the general rule but financial institution will not look at a PLR.
Thanks
Jim
Permalink Submitted by Alan Spross on Fri, 2012-01-27 19:03
Jim,
Here is an article by Natalie Choate which addresses dealing with balky financial firms. But in the end if they will not establish inherited IRAs for estate beneficiaries, the executor can do a trustee to trustee rollover to a firm that will set up those accounts.
http://www.ataxplan.com/bulletinBoard/ira_providers.cfm