IRA

Submitted by Gerald Summers on Thu, 2015-01-08 15:55

Client’s wife died and before he could change his beneficiaries to his children he died suddenly.

The custodian told his Executor the assets must be transferred to the deceased spouse’s estate, they could no longer be stretched.

Any comments.



Submitted by Alan - IRA critic on Thu, 2015-01-08 16:42

What was age of client when he passed?  The custodian should know what their IRA agreement default beneficiary provisions are, but the agreement should be checked nonetheless. IRA custodians will push to distribute a lump sum out to the estate, but this should be resisted until all the options are known. A small stretch if often better than none at all. If client passed prior to the RBD, the 5 year rule would apply, otherwise the remaining life expectancy of the decedent.



Submitted by Gerald Summers on Thu, 2015-01-08 19:45

84 yrs old.



Submitted by [email protected] on Thu, 2015-01-08 17:49

Assuming there was no contingent beneficiary, wouldn’t it go to his own estate (barring custodial agreement) and not the estate of his predeceased wife?  Can’t imagine why it would go to her estate… Maybe we are not talking about the right account owner to begin with. I am assuming the OP was asking about the survivor’s own plan, not that of the decedent.



Submitted by Gerald Summers on Thu, 2015-01-08 19:46

no contingent beneficiary- deceased wifr still list as primary.



Submitted by Alan - IRA critic on Thu, 2015-01-08 20:18

  • It appears most likely scenario is that the IRA was originally the client’s with his wife as beneficiary. She passed, then before he made any changes to his beneficiaries, he passed at 84. Default beneficiary is HIS estate. It would only be his wife’s estate if she passed after he did.
  • Under above assumed scenario, his executor should resist any custodian pressured distributions to the estate even though the client’s year of death RMD might not have been completed. The beneficiaries of his will are able to receive separate inherited IRAs assigned to them by the executor, and they are then able to take RMDs using the remaining life expectancy of the decedent (Table I divisor using decedent’s age at end of year he passed reduced by 1.0 for beneficiary’s first RMD year in the following year). If the IRA is small enough, lump sum may be agreeable to the beneficairies.  Year of death RMD must also be completed and penalty waiver request filed by recipient on Form 5329. 5 year rule cannot apply since death was post RBD. Custodian would much rather just dump the IRA out to his estate instead of setting up inherited IRAs for estate beneficiaries. In extreme cases, the IRA might have to be transferred to another custodian who will cooperate.


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