Decedent’s IRA

Submitted by Julia zhai on Wed, 2016-05-11 14:50

Hi,

The decedent(passed away in July 2015) had an IRA with Fidelity which named the grandkids as beneficiaries. The IRA made RMD to the decedent’s trust. Then the IRA made total distributions to the grandkids as stretch IRA. The total assets of the decedent did not exceed estate tax exemption. However, there was no 1099-distribution forms sent to the beneficiaries from Fidelity.

The question is:
1. Should Fidelity issue 1099-R to the beneficiaries?
2. Should the decedent’s estate issue k-1 to the beneficiaries instead then? Should the activity consider the lump-sum distribution from the estate or trust?

Thanks so much for your help.

Julia



Submitted by Alan - IRA critic on Wed, 2016-05-11 17:53

  1. No, what you referred to as a distribution to the grandkids was a non reportable transfer to their separate inherited IRA accounts.
  2. When was the decedent’s RMD distributed? If prior to death, there would be a 1099R issued to the decedent. If after death, the 1099R and the distribution should have been made to the grandchildren, since they are the designated beneficiaries.
  3. If the grandchildren are also beneficiaries of the trust and a distribution from the trust was made to them,there would be a K 1 issued to the grandchildren and reported on the trust’s 1041. There was a lump sum distribution from the trust or estate? Did the trust make a 645 election to be treated as part of decedent’s estate?

Submitted by Bruce Steiner on Sun, 2016-05-15 12:14

The facts are confusing.  If the IRA owner named his/her grandchildren as beneficiaries, what is the relevance of the “decedent’s trust”?  How can an IRA owner leave an IRA to a trust for his/her own benefit?

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