estate named as ira beneficiary
I just read your February newsletter.
the bottom of page 4 states that if a person inherits an ira through an estate that the deceased life expectancy needs to be used. we have been doing it based on the irs publication below
IRS Publication 590B says, page 8 attached, if beneficiary is not an individual (for example, the beneficiary is the owner’s estate) see Trust as beneficiary. Page 12 attached, Trust as beneficiary section says “a trust cannot be designated beneficiary even if it is a named beneficiary. However the beneficiaries of a trust will be treated as having designated beneficiaries for purposes of RMD after owner’s death”, in which case Table I Single Life Expectancy for Beneficiaries should be used.
Permalink Submitted by Alan - IRA critic on Wed, 2017-01-25 22:27
Not sure what your question is. An estate beneficiary is treated differently than a trust beneficiary. For an estate beneficiary there are no exceptions to the RMD distribution period. It is either the 5 year rule if decedent passed prior to the RBD or the remaining life expectancy of the decedent if they passed after RBD. A qualified trust is treated differently as the oldest trust beneficiary’s life expectancy can be used. Not sure if this answers your question.
Permalink Submitted by Irene Feeley on Thu, 2017-01-26 14:54
what table should be used if an estate was named as beneficiary , the account is now titled beneficiary name b/o deceased client name ira as b/o estate
Permalink Submitted by Alan - IRA critic on Thu, 2017-01-26 16:42
Table 1 (single life table is used) if owner passed on or after the required beginning date. The table is entered using the age of the decedent at the end of the year of death, then reduced by 1.0 each year thereafter. The first beneficiary RMD is due the year following the year of death, so for that RMD the divisor will be 1.0 less than the table divisor for the year of death. If owner passed prior to RBD, the 5 year rule applies and no table is used. Note that the executor can assign the inherited IRA out of the estate to the beneficiary of the will, but that does not change the RMD calculation.