Can Estate Disclaim IRA benefit
My father’s IRA names his estate as the beneficiary. Is it possible for the representative of the estate to disclaim the benefit, thereby allowing the plan document to take precedence and allow the IRA to be rolled to the surviving spouse? I have heard that IRS rulings would not view this as a qualified disclaimer. We are trying to figure out if we can roll the IRA to the spouse, and therefore defer the income tax. If it matters, my father had not yet started taking RMD.
Permalink Submitted by Alan Spross on Fri, 2008-03-07 04:14
There may be some options to approach this. Attached is a link to a Bruce Steiner article that indicates various ways to address this, depending partially on who the will beneficiaries are. I do not believe that an executor can disclaim for the estate, but the beneficiaries themselves would have to disclaim. There is also a possibility that later rulings have altered the some of the finer points here over the last decade:
http://www.kkwc.com/docs/AR20050125164755.pdf
Permalink Submitted by Kurt Wolter on Fri, 2008-03-07 15:09
Alan, Thanks for the information. There are a lot of interesting rulings in the article that you referenced. It is unfortunate that the article is over 10 years old. But it did offer several scenarios that I will investigate further.
Permalink Submitted by Bruce Steiner on Fri, 2008-03-07 19:03
Alan: thanks for mentioning my article.
It’s still current. Of course, there have been many more rulings in the last 10 years. If anything, the IRS is a bit more liberal today than they were then.
The IRA owner’s estate can’t disclaim. But with enough disclaimers it’s often possible to accomplish the desired result.