Estate as Beneficiary
I have a client that is the beneficiary of her Son’s Estate. He had no named beneficiary on his IRA. She is 80 years old and the Son was 60. I know that we have to use the 5 year rule for the RMDs.
My question is since she is 80 and in bad health, if she passes before the end of the 5 year period, do we continue on the 5 year payout schedule to her named beneficiary?
Thank you for your help.
Permalink Submitted by Alan - IRA critic on Fri, 2018-08-31 18:14
Son’s executor can assign the inherited IRA to his mother, and her distributions are subject to the 5 year rule. If she names her own successor beneficiary, the inherited IRA must be fully distributed by the end of the original 5 year rule period. These are IRA rules, but it is also possible that the IRA beneficiary clause might require a lump sum distribution to be made. Quite frequently, an IRA custodian will push for a lump sum distribution even if the IRA agreement does not specify that, but the beneficiary should resist if that happens.