Beneficiary death before settlement
John dies at age 80 in 2014 with his three sons as beneficiaries. Two of his sons establish inherited IRAs in 2015 but one son (Bill) dies in February 2015 before he establishes an inherited IRA. Can the executor of Bill’s estate instruct the IRA custodian to establish an inherited IRA in the name of the beneficiary of Bill’s estate (Bill’s son Troy) and can Troy take distributions based on Bill’s remaining life expectancy? Thanks for any help with this
Permalink Submitted by Alan - IRA critic on Thu, 2015-10-22 19:49
Yes, Troy can do that. Since the other two sons established separate accounts, that leaves Bill’s interest unaffected by the other beneficiaries. Per “Death of a beneficiary” paragraph in Pub 590 B p 9, and the Note at end of p 8, Bill’s life expectancy is used for the RMD distribution period for Bill’s share of the IRA passing to Troy.
Permalink Submitted by Robert Wright on Fri, 2015-10-23 00:40
Any suggestion about what to do in the event the custodian of John’s IRA claims that they cannot establish an IRA in the name of Troy?
Permalink Submitted by Alan - IRA critic on Fri, 2015-10-23 01:54
Natalie Choate has some suggestions here: https://www.ataxplan.com/bulletin-board/notice-to-executors-and-trustees/