inherited IRA
I have a client who’s father passed and has an annuity IRA. The children are listed as beneficiaries on the account, when talking with the company they are just servicing the annuity and will not open any new accounts. Can my clients portion be transferred into an Inherited IRA that I establish if it is coming from the IRA of deceased not inherited IRA account.
Permalink Submitted by Alan - IRA critic on Fri, 2019-05-10 17:25
The beneficiaries must first have the inherited IRA annuity re titled in beneficiary format. They are not able to activate any options (no matter how limited) until that is done. If father had annuitized the contract, the beneficiaries will be stuck with whatever format father purchased. If the contract had not been annuitized, it will may be very difficult to get the balance transferred to another custodian. In other words, the beneficiary can transfer the inherited account to any receiving inherited IRA custodian under IRS Rules, but the insurance company may not cooperate. The children will have to find out exactly what their options are, but they will be much more restricted when an annuity IRA is inherited than typical inherited IRA at a brokerage. Of course, the children are responsible to complete the year of death RMD of father, and then to begin to receive beneficiary RMDs in the following year. The IRS does care about that, but also allows the custodian to place a number of other restrictions on the inherited account.