Is an Estate IRA required?
An IRA owner passes at age 78 without naming a beneficiary. Once heirs are identified and assuming they want individual inherited IRAs…must an Estate IRA be opened first and then a direct transfer to inherited IRAs for the beneficiaries or can the transfer be made directly from the deceased’s IRA to the beneficiaries’ inherited IRAs?
If the custodian is reluctant to process a transfer to inherited IRAs (Whether from Estate IRA or directly from deceased’s IRA), are there any restriction/limitations on transferring the deceased’s IRA (or Estate IRA) to a more accommodative custodian?
Permalink Submitted by Alan - IRA critic on Tue, 2023-06-20 17:24
The estate must set up an inherited IRA for the estate. If the IRA custodian will not cooperate with the executor to assign the inherited estate IRA funds out of the estate to separate inherited IRAs for the estate beneficiaries (whether under a will or intestate beneficiaries), the inherited IRA can be directly transferred to a more cooperative custodian. Again, almost all custodians will require an estate inherited IRA to be set up first under the estate TIN as it helps to provide a proper paper trail.