IRA tranfer complicated by incorrect titling – help – 4 questions
When person was alive:
IRA FBO James Alive Pershing LLC as Custodian Rollover Account
Primary beneficiary listed on account is deceased
Under James social security
Was taking RMD’s
Person passes:
IRA FBO James Decd Perishing LLC as Custodian Rollover Account
Still under James social security
Side Bar: Joseph is the only beneficiary of the estate that went to probate
Proposed retiling:
Joseph Trustee, IRA FBO Estate of James, Estate
NEW: Using social of Joseph
1. Were the old accounts titled correctly?
2. How should the final account be title?
3. Can RMD’s still be taken?
4. MILLION DOLLAR QUESTION. Whose social security should be on the final account?
Permalink Submitted by Alan - IRA critic on Fri, 2013-03-15 20:58
Permalink Submitted by Peggy Fisher on Fri, 2013-03-15 21:20
1. Yes. She pre deceased James.2. Yes. He passed AFTER his RBD (Required Beginning Date)3. James estate went to probate. We do not say know the orginal IRA application’s default was.4. Joseph is the trustee of the estate. the Superior Court of the state of California for the count of Los Angels said so “Order approving first and final report of executor on waiver of account, allowing staturotry attorney’s fees, authorizing reserve, and directing final distribution.”We are still not clear about our path.Is the final account title correctly and is it correct to use Jospeh’s social security and can Joseph take RMD’s based on the deceased James’s date of birth?
Permalink Submitted by Alan - IRA critic on Sat, 2013-03-16 02:41
If the estate is the default beneficiary when the designated beneficiary pre deceases and the IRA owner passes after the RBD, the estate or beneficiaries of the estate can take RMDs using the remaining life expectancy of the decedent. The divisor is determined using the single life table and age of the decedent in the year of death, and then reduced 1.0 each year after that. Therefore the first beneficiary RMD will use a divisor of 1.0 less than the divisor in the single life table for the deceased’s year of death. There are different options for the title of an inherited IRA, and IRA custodians have their preferences. The initial title of the inherited IRA should show the “estate of James as beneficiary of James IRA” or reverse order “James, deceased, estate of James beneficiary” or similar. Under this situation, the estate EIN would show on the inherited IRA. However,when the executor has authority to terminate the estate, the inherited IRA can be assigned directly to the beneficiary of the estate and then the inherited IRA is re titled to show the beneficiary’s name, as beneficiary of James estate, and the beneficiary’s SSN is assigned to the inherited IRA. Note that if the estate can be closed in short order, there is no reason a distribution would have to be made to the estate. Otherwise, the RMD would be made to the estate and passed through to the estate beneficiary. Does this answer all your questions?
Permalink Submitted by Peggy Fisher on Wed, 2013-03-20 15:39
First of all I would like to thank you for your help.Not so much a quesiton but I want to make sure I understand.The final account is titled correctly. The only beneficiary could and should use his social. He could because you said so and he should because that way the estate would not have to remian open and file taxes each year. And the only beneficary can continue to take out RMD’s and would then be correctly taxed useing his social security.How did I do?
Permalink Submitted by Alan - IRA critic on Wed, 2013-03-20 19:18
Fine. You’ve got it.
Permalink Submitted by Peggy Fisher on Thu, 2013-03-21 17:45
Hi,I agree with you. Evidently I understand you. Where do you go when the companies won’t do what there supposed to do because they do not understand how IRA’s work?
Permalink Submitted by Denise Appleby on Sun, 2013-03-24 14:25
The default for Pershing is the surviving spouse, if any. If none, then the beneficiary is the children per stirpes. If none, then the estate is the beneficiary.Pershing understands the rules. You just need to speak with someone from the IRA department.
Permalink Submitted by Peggy Fisher on Fri, 2013-04-05 19:45
I did everything you suggested. My compliance supervision department just left a message that Genworth/Pershing will not make an exception.What if anything would you do now?I feel very badly for my advisor’s client. They way they want to title the account is as an estate account. Joseph Trustee, IRA FBO Estate of James, EstateJoseph benificaryDoesn’t he now loose out on the stretch and isn’t he forced to distribute the funds within five years?
Permalink Submitted by Bruce Steiner on Fri, 2013-04-05 21:41
Peggy tells us that Joseph is the sole beneficiary of James’ estate. Denise tells us that the default beneficiary is the spouse, otherwise the issue. Assuming Denise is correct, the missing piece of information is whether James left a surviving spouse (in which case the IRA would be payable to the surviving spouse, who could roll it over and get a stretch), or if not, then whether James left any issue (in which case the IRA would be payable to them and they could get a stretch). If James didn’t leave a surviving spouse or any issue, then the IRA would be payable to James’ estate, which could either remain open and collect the benefits or distribute the IRA in kind to Joseph, in either case without a stretch beyond the 5-year rule (if James died before his required beginning date), or over James’ life expectancy as if he hadn’t died (if James died after his required beginning date). It’s not unusual to have a problem dealing with the lower level people at the financial institution. Usually the attorney handling the estate can reach someone higher up at the financial institution and resolve it. If that doesn’t work, often the solution is to move the account to a different financial institution.The fiduciary for an estate is an executor, administrator or personal representative, not a trustee. A trustee is the fiduciary for a trust.