Non-US citizen, non-resident beneficiaries of IRAs
I have an IRA, a Roth IRA, and an inherited IRA, and two of the beneficiaries are non-US, non-resident citizens (they are citizens of Sweden). They will also inherit non-IRA money.
What are the issues regarding their inheritance? Do I have to do something special in my will, or can I just list them and the executor will ensure that the appropriate US taxes are taken before the remainder is sent to them in Sweden?
Thanks.
Permalink Submitted by Alan - IRA critic on Tue, 2024-08-06 14:05
Taxes depend on the tax treaty between the US and Sweden. If the beneficiary is named on the IRA document it passes to that beneficiary outside of the estate or will and is not subject to probate so the executor has no official role with respect to such accounts.
The US/Sweden tax treaty seems to eliminate double taxation of distributions, but I cannot be more specific regarding how this is done. The likely withholding rate for non Roth distributions is 30% and the beneficiary will have to file a US return to determine the actual tax due.
RMDs are not affected and the 10 year rule is most likely to apply with no annual distributions required from the inherited Roth, but are required for the inherited TIRA if the owner passes after their RBD.