Beneficiary dies 10 days after IRA owner dies and hasn’t opened up accounts yet …. what next?

Submitted by Todd Marquardt on Mon, 2023-07-31 17:08

I have a client who passed away and then ten days later, one of the three beneficiaries dies without accounts being opened up yet. That deceased beneficiaries portion of the personal account, Roth IRA and IRA will go into respective Estate accounts (Estate account, Estate beneficiary IRA and Estate beneficiary Roth IRA). The deceased beneficiary has a will which has their estate going to his two children.

Once the money is in the Estate beneficiary IRA and Roth IRA, can that money then be further moved into Beneficiary IRAs and Beneficiary Roth IRAs for the benefit of his two children? Or, does that money have to be distributed right away or can it be distributed over 5 or 10 years?

Thanks so much for your insight.



Submitted by Alan - IRA critic on Mon, 2023-07-31 18:16

  • With a cooperative IRA custodian, the executor should be able to assign the deceased beneficiary’s share to the individuals named in their will. The living beneficiaries should proceed to establish separate inherited IRA accounts by the deadline.
  • RMDs for the inherited TIRA are partially determined on whether the IRA owner passed prior to RBD or after. The inherited Roth is automatically treated as if the owner passed prior to RBD, so there will be no annual RMDs required for the Roth, just the 10 year rule. If owner passed after RBD for the TIRA, annual RMDs will eventually be required (although the IRS has waived them through 2023) in years 1-9 of the 10 year rule. The 5 year rule does not apply, but it’s possible that one or more beneficiaries is an EDB, eligible for the life expectancy stretch rather than the 10 year rule. 
  • The two children inherit the RMD schedule of the deceased parent, most likely the 10 year rule. If the surviving beneficiaries establish their separate inherited IRAs by the deadline, and if the owner passed after RBD, the inherited TIRA annual RMDs are based on the oldest of those two children. These RMDs are the same whether the inherited IRA can be assigned out of the estate or not, but if not due to an uncooperative IRA custodian, the executor will probably want to close the estate which would result in a lump sum distribution. 
  • Separately from the above, the estate and the other two beneficiaries have a joint responsibility to complete the year of death RMD of the owner, if this was not done. This can be done in any combination between these parties, but will obviously require cooperation and communication. 
  • Lots of variables in play here.


Submitted by Todd Marquardt on Mon, 2023-07-31 22:46

Thanks for the reply.What’s interesting is the attorney for the beneficiaries is stating that the money from the original IRA owner has to go into Estate beneficiary IRA and Roth IRAs first and then has to be distributed right away as there was no trust, just a Will. He also stated that there would be no 10 year rule on this.Our custodian is stating that we can bypass that and go directly from the original IRA owner IRAs into beneficiary IRA and Roth IRAs as we have the Will and other supporting documents and thus can do a ‘look through’.  I thought that was only for trusts.Thanks!



Submitted by Alan - IRA critic on Mon, 2023-07-31 23:41

  • A beneficiary who passes after the owner is still treated as the beneficiary for RMD purposes (assuming that their executor does not disclaim on their behalf. Therefore, the beneficiary’s estate is a successor beneficiary to the deceased beneficiary, and still bound by the RMD rules that would have applied to the deceased beneficiary. The beneficiary’s attorneys fail to recognize that successor beneficiaries including estates are not treated as beneficiaries of the IRA owner, so the 5 year rule or remaining LE of the deceased owner does not apply. 
  • It is not clear whether the deceased beneficiary was a 10 year rule beneficiary or an EDB, but that’s irrelevant here because the 10 year rule will apply to the estate beneficiaries either way. When an EDB passes, the 10 year rule kicks in and since the beneficiary passed in the same year as the IRA owner, the 10 year period is the same, ending in 2033 if the deaths were in 2023. 
  • Again, annual RMDs in years 1-9 will not apply to the inherited Roth IRA and will only apply to the TIRA if the owner passed post RBD. Those would begin in 2024 and would use the age of the deceased beneficiary to calculate those annual RMDs. 
  • The following link explains all these successor beneficiary issues:
  • Successor Beneficiary RMDs After Inherited IRA Beneficiary Passes (kitces.com)
  • As for the IRA custodian, they are obviously willing to accept an assignment of the estate inherited IRA out of the estate to individual inherited IRA accounts, but that is different than a “look through” or qualified trust. Even if the deceased beneficiary had designated a trust as their successor beneficiary, the trust would not qualify for look through or change the RMD rules because that trust was not named as a beneficiary by the IRA owner. An entity such as an estate or trust that inherits from an existing beneficiary is treated as a successor beneficiary in the same manner as an individual. 


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