IRA with no beneficiary
Hello. This is Susan. My husband died in September of 2019. He was 77 years old and had been taking distributions
from his IRA account from Chase bank. When he died, Chase informed me that there was no beneficiary on the account.
I gave them the death certificate, letters of testamentary showing that I was the executor and sole beneficiary of the estate.
Now, the IRA is in the estate.
Last year because of the pandemic, I did not even think about this account because the RMD’s were not mandatory.
Recently I contacted the broker who handles this account to ask about the requirement for the RMD. She told me that I had to liquidate the whole account. I did not want to do that, so I began to look for answers. I came across your information
from July of 2012. Then i began to ask my accountant what i should do. I spoke to two different tax attorneys who gave
me two different answers. I have tried to understand the IRS tax code of 401 and 408 but I am still not sure of the correct answer. I hope you can help.
Thank you,
Susan
Permalink Submitted by Alan - IRA critic on Thu, 2021-11-18 18:17
This is not surprising. If you asked 10 different accountants or IRA custodians, you would probably get several different answers. Banks tend to gravitate to lump sum distributions, but the bank cannot force you to take a distribution you don’t want to take. The main issue here is that there have been several IRS letter rulings allowing a surviving spouse sole beneficiary to assign the inherited IRA out of the estate to her own inherited IRA, after which the spouse could immediately elect to assume ownership of the inherited IRA.
Starting from the beginning, since your husband passed after his required beginning date, the estate would have to take annual RMDs using his remaining life expectancy. But you probably do not want to keep the estate open for 10 more years. Having the bank as custodian, I can almost guarantee you that they will resist your letter of instructions as executor to transfer the IRA out of the estate to an inherited IRA you would open there as beneficiary. They may ask you to get your own PLR, which is totally unnecessary and would cost you around 20k, so this is not a practical solution. The following link provides additional discussions for a situation much more complex than yours, but provides further background, but the link to a sample letter to send to the IRA custodian no longer works. The wording of your letter is critical, so you may want to get an estate attorney to write it for you. Basically, you are just asking to distribute the IRA out of the estate to an inherited IRA for yourself. If you can get this done with the spousal assumption of ownership by year end, the RMD for 2021 will be based on your age and the Uniform Table if you are RMD age. It will be much lower than an inherited IRA RMD from the Single Life table.
inherited IRA from estate to heirs | Ed Slott and Company, LLC (irahelp.com)
Permalink Submitted by Bruce Steiner on Mon, 2021-11-29 02:56
See my articles on this subject in the October 1997 issue of Estate Planning, https://www.kkwc.com/wp-content/uploads/2015/04/AR20050125164755.pdf , and the June 2015 issue of Trusts & Estates, https://www.kkwc.com/wp-content/uploads/2015/08/IRA-Rollovers-Making-this-option-possible.pdf .