Disclaiming IRA assets

Submitted by Kevin O'Hearn on Thu, 2018-12-06 18:04

Hello, if an IRA owner (72 years old) passed away this year (September) and has not taken their RMD and there is one beneficiary. Can the beneficiary inherit the IRA and take the 2018 RMD and then disclaim the assets in February since it is with 9 months? Or is case that once you inherit them you cannot disclaim the funds?



Submitted by Alan - IRA critic on Thu, 2018-12-06 23:25

  • Per RR 2005-36, the year of death RMD can be withdrawn by the beneficiary without being considered account acceptance. Therefore, a qualified disclaimer per Sec 2518 can still be executed within 9 months of the DOD. Obviously, the beneficiary must be extremely careful not to distribute one cent more than the remaining year of death RMD and must also be careful when determining exactly what the uncompleted year of death RMD amount is.
  • The disclaimed amount determination is also very tricky because the income earned in the IRA between the DOD and the disclaimer date must be disclaimed as well if only a portion of the IRA is disclaimed. There are examples included in the revenue ruling.

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