No named Beneficiary
Mother (70.5) passes away with $1,000,000 IRA. Named bene is deceased spouse. Childeren never named as contingents. Does money need to be distributed or can bene IRA’s be established and funds be rolled into?
Mother (70.5) passes away with $1,000,000 IRA. Named bene is deceased spouse. Childeren never named as contingents. Does money need to be distributed or can bene IRA’s be established and funds be rolled into?
Permalink Submitted by Alan Spross on Tue, 2011-07-19 18:13
With no contingent beneficiaries named, the IRA will pass to the default beneficiary under the term of the IRA contract. In this situation, that will almost surely be the estate of the IRA owner. If Mother has a will, the IRA will pass according to the will provisions.
70.5 could be before or after the actual required beginning date (4/1 of the year following the year she turned 70.5). If she passed prior to the RBD, then the 5 year rule will apply because the estate will be the beneficiary. If after the RBD, then the RMDs for the beneficiaries will be based on the remaining non recalculated life expectancy of Mother.
The will beneficiaries should be able to set up separate accounts, but the RMD divisor will be the same for all of them. The estate does not have to stay open until the IRA is distributed.
If there is no will, the state intestacy provisions will determine the IRA beneficiaries.
Permalink Submitted by Denise Appleby on Fri, 2011-07-22 13:52
Let’s hope she used a beneficiary friendly IRA agreement. Many of the larger custodians now include the children as part of the default beneficiary. Have someone familiar with IRA plan language do the review-if the customer service department provides an answer as to what the provisions are; ask that they show you the exact location in the document that addresses the matter.