Beneficiary-disclaiming rights to acct -death 7/2011
My client passed away July 29, 2011 however no one ever notified us or the fund company until this week, August 2012. The beneficiaries on his IRA account are his wife and his daughter – split evenly. The daughter wanted to disclaim her portion of the account but was told it was too late – it needed to be done within 9 months from her father’s death. Is this the case? What are her options?
Also, is there a time limit for dividing the account between the 2 beneficiaries? It has been over a year since the client’s death.
The client was receiving his RMD – it was paid out from his account in December 2011 but has not been paid for 2012.
Permalink Submitted by Alan Spross on Tue, 2012-08-21 19:52
Yes, the 9 month time limit applies to disclaimers unless the daughter is under the age of majority.
There is no time to set up separate accounts, but in this case the daughter’s separate account needs to be established prior to 12/31/2012 for her to be able to use her own life expectancy instead of the oldest beneficiary.
The 2011 RMD should have been totalled the client’s RMD between what he took out and the beneficiaries took out. For 2012, if the separate accounts are established by year end, each beneficiary will take their own RMD based on 50% of the 12/31/2011 IRA balance and their attained ages as of year end 2012. This divisor is then reduced by 1.0 for each year thereafter.
The wife has the option to roll her share over to her own IRA or maintain her share as inherited. If she is over 59.5, then she roll her share over to her own IRA. Her RMD would then be determined as an IRA owner for 2012 rather than as a beneficiary.