IRA With No Beneficiary
A 94 year old widow dies and failed to name her three children as beneficiary. The CPA is finding out if the woman actually left the beneficiary form blank, or if she acually named the estate. The CPA is also finding out if there is a default provision in the IRA agreement that would allow the IRA assets to pass to the children so they can take RMDs over their remaining life expectancy. I wanted confirmation on my understanding of the children’s possible options:
1. If she did in fact name the “estate” as beneficiary and assuming the three kids are the beneficiary in her will, can’t they each establish their own Inherited IRA and take RMDs over the remaining life expectancy of the deceased mom since she was past her RBD? Not exactly sure of the protocol on this.
2. If she did in fact not name any beneficiary, is the option the same as in item number 1 above? What I mean is, is there a difference between leaving the form blank vs. actually naming the estate?
3. If she named the “estate” on her form, and if there is a default provision in the IRA document that states the children are to inherit the IRA, can the three children then set up their own Inherited IRA and take RMDs over each of their remaining life expectancies?
Thank you as always!!
Permalink Submitted by Alan Spross on Wed, 2012-10-10 18:57
1) Yes, but the life expectancy for a 94 year old is only 4.3 years in the year of death. The beneficiary RMDs in the following year therefore will have a divisor of 3.3.
2) No difference IF the estate is the default beneficiary under the IRA agreement or the estate was named as beneficiary by the decedent.
3) No. If she listed her estate on the beneficiary form, see 1) above. The children cannot use their life expectancy for RMDs. For the children to use their own life expectancy, she would have had to leave the beneficiary form blank AND the IRA default beneficiary would have to show her children as default beneficiaries, probably an unlikely scenario.