IRA – Estate as Beneficiary
Hello All,
My ex-husband had several IRAs with his Estate listed as his beneficiary. He died in 04/2021 and left no will. He doesn’t have a spouse. His only child (our daughter) is his only heir. She has been appointed as Administrator of his Estate. Edited to add he was 60 yrs old. So before required beginning date.
We believe the way to handle the IRAs to be as follows:
Open an Inherited IRA in the Estate’s name. (i.e., Daughter as Administrator of the Deceased Dad’s Estate Inherited IRA or something like that) and then fund with the assets from the dad’s IRA. Since it’s a non-designated beneficiary – distribute assets from account within the 5 year period. Accounts should be depleted by 12/31/2026. (Year following the year he died – have read conflicting info even on the IRS website.)
Financial guy @ Bank insists that daughter wait until after she receives Judgment of Possession and then she can open a “Beneficiary IRA” in her name – Daughter INH IRA Beneficiary of Deceased Dad. This will enable her to stretch the distribution scheduled to 10 years as a Non-Spouse but named beneficiary.
What are your thoughts?
Thanks.
JTM
Permalink Submitted by Bruce Steiner on Wed, 2021-08-25 22:26
She shouldn’t take legal advice from Financial guy @ Bank.
If she uses a fiscal year for the estate, she can spread the distributions over 7 rather than 6 taxable years.
What is a judgment of possession? Usually that’s what a landlord gets when evicting a tenant.
Bruce Steiner
Permalink Submitted by Jan Cole on Thu, 2021-08-26 01:59
Agreed. She said he’s very convincing. Said he’s done it before.Good idea about fiscal year.From what I understand a Judgement of Possession is legal document transferring title to property. Close estate and transfer ownership.Thanks
Permalink Submitted by Alan - IRA critic on Wed, 2021-08-25 23:36
Note that the 5 year rule only applies if father passed prior to his RBD. Determining the exact RBD can be tricky after the Secure Act since the RBD was advanced either 1 or 2 years depending on the DOB. And if he passed on or after his RBD, the 5 year rule does not apply at all. The remaining LE of father would apply. Can better clarify if you provide father’s DOB. Further, the 10 year rule cannot apply here since father’s estate inherited the IRA, not your daughter directly.
Permalink Submitted by Jan Cole on Thu, 2021-08-26 02:09
Father was only 60 yrs old. So passed before his required beginning date.Thanks.