Inherited IRA is Beneficiary ever referred to as owner?
When a non spouse Beneficiary (child of decedent) inherits a traditional IRA, is that Beneficiary now considered the owner of the Inherited account? I’m asking specifically about the RDD Distribution Form the Custodian is asking the Beneficiary to sign. Where it says Type, it correctly says Inherited IRA but under Payee, the Owner Choice is checked instead of the Beneficiary box. The title will be: Jane Doe (Decd) Mary Jones (Bene) so I guess the titling is correct, but I wasn’t sure if the Beneficiary is ever referred to as the Owner even after they inherit? Does this vary by Custodian? Or should Beneficiary be checked instead of owner on this form? Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2016-11-03 03:29
While the beneficiary is effectively now the owner of the account because they have full control of it, the IRS views them as the beneficiary with respect to RMDs and the 1099R coding of distributions (code 4 death distribution applies). Therefore, the beneficiary box should be checked since this is a distribution form.
Permalink Submitted by Cheryl Van Beek on Thu, 2016-11-03 18:29
Thank you. I do know that on the 1099-R code 4 death distribution must appear. But, just to be clear, in one of the forms necessary in setting up this inherited account– the RDD distribution form that Custodian is giving to Beneficiary/new “owner” to complete should have Beneficiary box checked and not Owner box? I’m clarifying because that’s what I thought, but they’re telling me that since the beneficiary is now the account owner it should say Owner not Beneficiary on this RDD form.
Permalink Submitted by Alan - IRA critic on Thu, 2016-11-03 20:21
See other thread, where this is addressed.