What happens if you pass Sept 30th date to declare a designated beneificary? (due to Advisor)
July 18, 2008 – Date of Death of primary beneficiary of IRA Account Holder.
June 13, 2011 – Date of Death of IRA Account holder.
June 30, 2012 – Date on account statement where account holder appears to be alvie but is not.
October 2, 2012 – Date of the court hearing. Executor is named. Executor is only beneficiary of estate.
October 24, 2012 – Date when the title of the account changed by Pershing. Only change is to add the word “deceased”.
Currently the account is being processed to be an Estate Account, however, the goal is to look through the estate and then transfer the account to individual IRA so that the court delcared designated beneficary could stretch the IRA over his life time.
At what point should the year of death RMD’s be taken? and by whom? deceased was taking RMD’s and took $3,000 of the $4,669 for 2011.
No RMD’s were taken for 2012. At what point should 2012 RMD’s be they be taken? and by whom?
Permalink Submitted by Alan - IRA critic on Thu, 2013-05-23 23:51
Apparently, the IRA owner’s estate is the default beneficiary on this agreement for which the only designated beneficiary pre deceased the owner. The owner passed after their required beginning date. While this IRA can be assigned to the beneficiary under the IRA owner’s will that happens to be the executor, the will beneficiary will NOT be able to stretch RMDs over their life expectancy. The remaining life expectancy of the decedent must be used. The estate or the estate beneficiary must distribute the rest of the 2011 RMD and the 2012 RMD and request that the IRS waive the penalty on Form 5329. All RMDs will be taxable to recipient in the year distributed. Again, the estate beneficiary cannot be treated as a designated beneficiary even though the IRA can be assigned to that beneficiary out of the estate. The stretch will be limited to the remaining life expectancy of the decedent using their attained age as of 12/31/2011. The divisor from Table I for that year is reduced by 1.0 for the 2012 RMD and another 1.0 for each year thereafter.
Permalink Submitted by Alan - IRA critic on Thu, 2013-05-23 23:52
Apparently, the IRA owner’s estate is the default beneficiary on this agreement for which the only designated beneficiary pre deceased the owner. The owner passed after their required beginning date. While this IRA can be assigned to the beneficiary under the IRA owner’s will that happens to be the executor, the will beneficiary will NOT be able to stretch RMDs over their life expectancy. The remaining life expectancy of the decedent must be used. The estate or the estate beneficiary must distribute the rest of the 2011 RMD and the 2012 RMD and request that the IRS waive the penalty on Form 5329. All RMDs will be taxable to recipient in the year distributed. Again, the estate beneficiary cannot be treated as a designated beneficiary even though the IRA can be assigned to that beneficiary out of the estate. The stretch will be limited to the remaining life expectancy of the decedent using their attained age as of 12/31/2011. The divisor from Table I for that year is reduced by 1.0 for the 2012 RMD and another 1.0 for each year thereafter.
Permalink Submitted by Bruce Steiner on Fri, 2013-05-24 02:31
Some IRA agreements provide that the default beneficiary is the spouse. Some IRA agreements provide that if there is no spouse the default beneficiaries are the children, or the issue. Other IRA agreements provide that the default beneficiary is the estate. You might check to see whether the IRA agreement in this case provides for a default beneficiary.If the IRA goes to the spouse as the default beneficiary, or if the spouse is the beneficiary of the estate, the spouse may be able to do a rollover.Bruce Steiner, attorney, NYC, also admitted in NJ and FL