Deadline to Act on Inherited Assets?
Is there a deadline for a spouse beneficiary to make a decision on inherited assets? I have found no definitive answer on the paperwork we received and we haven’t officially reported the death of the primary by sending in the death certificate. While payments have stopped, they had continued until Sept so the RMD has largely been met.
My mom (age 72) has inherited as sole beneficiary from my dad (77 at death) his retirement accounts. Her largest account is in a metlife 403b guaranteed annuity which pays no less than 3.5% or indexed against the stock market. Even with the RMD the balance has never gone down due to the guaranteed return and the sizeable assets earning interest.
Unfortunately the account can’t be maintained as is (per met life and original 403b plan) and must be transferred to another account which means she loses the 3.5% guarantee. We are okay with that owing to the Stretch IRA possibilities. However, with the looming fiscal cliff and the potential for the stock market to take a serious hit in the beginning of the year, I’m inclined to leave the money where it is for a few more months before transferring it to her own IRA. I inquired and we can request the remaining RMD that my dad needed to take be paid out.
Thoughts?
Permalink Submitted by Alan Spross on Tue, 2012-11-13 17:16
There is no deadline although not acting can create some tax reporting problems and exposures to additional beneficiaries.
One problem is those checks being made out to your Dad, that your mom must negotiate. If the death certificate is submitted, the plan may have it’s own deadlines for certain options and may or may not allow your mother to remain as beneficiary, but NOT as the owner. Rolling this over to her own IRA account is generally the best option. If she is allowed to remain as beneficiary, there is no IRS deadline to roll the balance over to her own IRA. Her RMDs will be lower as an IRA owner than as a beneficiary and her successor beneficiaries will not get their own stretch unless they inherit an owned IRA account.
If she requests a rollover this year, the plan should issue any remaining 2012 RMD as a separate check. She should do a direct rollover to avoid withholding.
As for the fiscal cliff, Congress will prevent the worst shock from happening by taking some action. The bad news is that the action will mostly be kicking the can down the road another mile or so rather than producing a long term comprehensive solution. So expect the uncertainty to remain even after the worst of the cliff is avoided. If you want to stay mostly in cash, you can certainly do that in an IRA.