Decedent’s Estate Becomes Beneficiary of 401k and IRA
• Individual (Sam) dies intestate with 401k and IRA.
• Sam is unmarried and has no descendants.
• Both of Sam’s parents are deceased.
• Primary beneficiary on 401k and IRA was Sam’s deceased Mother.
• Retirement accounts had no contingent beneficiary listed.
The default beneficiary in the 401k and IRA now becomes Sam’s estate.
Texas Estates Code, Intestate Succession Sec 201.001 (e) stipulates the decedent’s entire estate passes to the person’s siblings under above conditions. Sam has three siblings.
Probate court has named one of the siblings as the Executrix (or equivalent).
Probate court has also confirmed the three siblings will be the beneficiaries of Sam’s estate.
The three siblings would like to defer distribution of Sam’s retirement accounts under the 10-year rule in a beneficiary IRA.
Would it be possible to establish a beneficiary IRA for each named sibling? If so, would it also be possible to rollover the 401k proceeds to each sibling’s beneficiary IRA?
Permalink Submitted by Alan - IRA critic on Thu, 2021-10-21 23:57
Need to know his age at death and DOB if known, and also if he was still working at the time for the 401k employer. The 10 year rule can be eliminated for estate beneficiaries. It’s either the 5 year rule for death prior to RBD or his remaining single life expectancy if he passed on or after his RBD. The executrix should be able to assign the inherited IRA out of the estate to the estate beneficiaries to manage individual inherited IRAs, but this does not change the RMD distribution period. Some IRA custodians make assignment difficult and it becomes a battle. Please advise on the age info.
Permalink Submitted by Glen Starr on Fri, 2021-10-22 03:48
Ok, thanks. Not sure about age (i.e. not my client), but believe date of death was prior to RBD, and was at employer with 401k on date of death. Thanks for the 5-year criteria on the estate as beneficiary. It’s my understanding the Executrix is running into some hurdles. Thanks again for commenting.