4 year old niece/beneficiary of uncle’s IRA
Hi – 46 year old uncle passed away in November, 2008, and he named his 4 year old niece as his beneficiary of his IRA. Parents would like to establish inherited IRA (uncle decedent IRA f/b/o niece) to get stretch. Parents would like to have beneficiaries of the inherited IRA for their daughter (the niece) be themselves and have been advised that no beneficiary designation is allowed in these circumstances and that the Estate of their daughter would be the beneficiary. Is this correct? Thank you.
Permalink Submitted by Bruce Steiner on Sun, 2009-03-22 16:28
A 4-year-old may be too young to name her own beneficiaries. Many 4-year-olds can’t even read and write. But it won’t make any practical difference. If she dies before she gets married or has a child and before she is old enough to name her own beneficiaries or make a Will, her parents (or the survivor of them if only one of them is living) will be the beneficiaries of her estate. Since this is an inherited IRA, after her death, her parents (or her estate or her beneficiaries) can continue to stretch the benefits out over the balance of her life expectancy measured from her uncle’s death, as if she were still alive. Fortunately, the chances of a 4-year-old dying before reaching age 18 are very small.