IRA help
My husbands brother died recently. He was never married and had no children. He left his IRA to his mother who died 7 years ago and never changed this. He left a will which equally divides his estate between his two brothers. Does the IRA go into the estate or can it be dispersed outside of the estate? If it goes into the estate does the executor then assign the inherited IRA to the will’s beneficiaries? He passed prior to the required beginning date. How should the brothers instruct the institution holding the IRA to title the accounts and do the stocks in the IRA have to be sold or can they be equally distributed to the new accounts.
Permalink Submitted by Alan - IRA critic on Wed, 2015-05-20 16:14
The IRA agreement must be checked to determine the default beneficiary, which in this situation would almost certainly be his estate. The executor of the estate can assign the IRA to the will beneficiaries who can then maintain separate inherited IRA accounts. The title of those inherited IRAs must include the brother’s name and the decedent’s name in no particular order. The 5 year rule will apply so there are no annual RMDs. Current investments in the IRA can be transferred in kind as long as the selected IRA custodian will hold those investments, or they can be sold and replaced. This article should be helpful in the moving the IRA out of the estate: http://www.ataxplan.com/bulletinBoard/ira_providers.cfm
Permalink Submitted by Ben Meyer on Thu, 2015-05-21 17:25
It’s not very likely, but if the IRA beneficiary form included a “per stirpes” election when naming the mother as the beneficiary, then the IRA can be distributed to the surviving siblings. Sometimes a “per stirpes” election can be made by checking a box on the beneficiary form. This is a long shot, but would be worthwhile to check.