Disclaiming a multi-beneficiary IRA

Submitted by Chrs VanCantfort on Sat, 2024-01-06 21:28

Widow had traditional IRA with 4 adult children specified as equal beneficiaries. There are no contingent beneficiaries. Widow had been making RMDs. Widow died recently in 2024 so the 2024 RMD has not been made yet. One of the four adult children wants to disclaim their inherited/beneficiary IRA.

1) How is the disclaimer done?

2) What happens to the disclaimed portion of the decedent IRA?

3) If the disclaimer is accepted by the IRA manager, are three separate inherited/beneficiary IRAs automatically created for the three claiming adult children? Do the three adult children have to do anything special?

4) How is the decedent’s death-year RMD made?

5) How does the IRS know that the decedent’s death-year RMD has been satisfied?

Thanks for any help.



Submitted by Alan - IRA critic on Sun, 2024-01-07 15:53

  1. Beneficiary should check with the IRA custodian to determine if they have their own disclaimer form. If not, they may be able to determine the proper verbiage that meets the requirements of Sec 2518 and submit it to the custodian before the 9 month deadline, or have an attorney prepare it.
  2. Depends on the default beneficiary provisions of the IRA. In most cases that share would be spread ratably between the remaining primary beneficiaries.
  3. The other 3 need to submit a death certificate and their personal contact info including SSN to establish separate inherited IRA accounts.  The custodian will not do it without this data.
  4. The year of death RMD can be completed in any combination of the beneficiaries. If the disclaimant receives all or part of the year of death RMD, it will not disqualify the disclaimer, but it will reduce the risk of error if the year of death RMD is left to the remaining 3. 
  5. The IRS would have to track the total distributions taken by the beneficiaries, and there is little chance that they actually do that. The beneficiaries do not report the year of death RMD distribution any differently than other distributions they receive. The new deadline for the year of death RMD is the filing deadline for the death year plus extensions, so 15 months from now if no extensions.

Submitted by Chrs VanCantfort on Tue, 2024-01-09 13:09

Thank you for your very helpful answer.

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