in process of inheriting…but institution sends RMD
I am a 50% beneficiary of an annuity from my recently deceased parent. I filled out the death benefit withdrawal form from the institution where the annuity resides. I asked them to send me a check for 50% of RMD my parent had not yet taken for 2012, and then to transfer 50% the balance of the account to another financial institution, to an Inherited Trad. IRA that is already established. The other 50% beneficiary did the same thing.
The annuity institution has received all the paperwork and is just waiting for the sign-off by my parent’s former employer (the annuity was deferred salary). I check every few days and they’re still waiting for the employer’s sign-off. I know they need to send me the RMD, in my name, before transferring the balance of the account to the other financial institution. BUT, apparently one department doesn’t talk to the other department….and today a check arrived for the full amount (not 50%) RMD made out the The Estate Of My Parent (name).
A) is it OK to send an RMD to a deceased person’s estate?
B) what happens if the other department sends me a check for 50% of the RMD (and another check for 50% to the other beneficiary) not realizing another department already sent out a check for 2012? This institution has been a nightmare to deal with on every step of this process, and I don’t think anyone there knows what’s going on, but I don’t want things done incorrectly (in the IRS’s view), nor did I want any money paid to the Estate Of. They have two people’s written instructions about sending 50% check to each beneficiary’s name, not to Estate Of.
Any suggestions on how to deal with this? Can we return the Estate Of check? What happens if they cut checks to the beneficiaries although they’ve already cut one to the Estate Of?
thank your for any help on this matter
Permalink Submitted by Alan Spross on Sat, 2012-11-17 04:50
Sorry to hear of your loss.
A) The RMD must be sent to the beneficiaries named on the plan document. The check only goes to the estate if the estate is named or is the default beneficiary. This applies whether the RMD is the plan owner’s RMD for the year or the beneficiary RMD for the following year. The check should be returned to the institution with another copy of the instructions. Does the institution even know the TIN for the estate?
B) If you receive the other checks before the estate check is returned, you should hold those checks until the situation is resolved and the institution voids the estate check. Then you have to make sure the account is credited for the amount of the returned check. Also, if the direct rollover to an inherited IRA is done before they credit the returned check, the check should still be returned, deposited to the original account and then sent out to the inherited IRA custodian as a second direct rollover.
This must be a small institution or one that does not retain professional servicing.
Permalink Submitted by ray perez on Sat, 2012-11-17 05:11
Thank you. Surprisingly, the institution is big and well-known. It’s very frustrating to deal with them. I hope we can get this straightened out.
There are two named beneficiaries on the plan, and have been since the annuity was started about 20 yrs ago. Sadly, there’s a 2nd annuity at the same institution we need to process the same RMDs and rollovers for, and I fear we’ll have the same problems with that one. In fact, the RMD for the other annuity is probably in the mail already, made out to the Estate of My Parent. Sheesh. We’ll have to go through this mess twice.