IRA Problem
I had a meeting with a potential client who has the following problem, about one year ago her father died and left an IRA worth @ $2 million to her mother. Her mother passed away 9 months and 1 day latter. The Investment Adviser had not converted the account to to the mother, he left it as a spouse IRA. No new beneficiaries were named. Mother died and division among 5 sisters as per will is equal. Adviser is telling the sisters, that since the Fathers IRA had not been converted to a IRA for the mother, the Sisters must take the amount as a lump sum, he says there is no stretch allowed nor the five year rule. I have never heard of this can anyone give advise?
Permalink Submitted by Bruce Steiner on Mon, 2011-12-05 21:15
How old was the father when he died?
Where was the lawyer for the estate when the father died?
Permalink Submitted by mk foss on Tue, 2011-12-06 00:09
The father’s age is relevant BUT life expectancy is the default for all IRA distributions at death. Which life expectancy to use is the question. If the custodian’s agreement does not allow a stretch, the funds should be transferred to another institution that will work with the beneficiaries.