Death claim IRA
Client had IRA Annuity with an enhanced bonus. If the beneficiary takes the money over five years she receives $117,000 plus some residual interest over the five years. If she takes it lump sum she gets $94,000. I compute this to be approximately a 4.25% return on her money annually by taking the larger payments. Beneficiary will be age 59 1/2 on June 2 of this year. Can she roll over these payments individually within 60 days as an IRA for herself or in her deceased husband’s name so that she may defer taxation or must she pay the tax on them. She could step in as the new spousal owner but then she has a cash value of $94,000 and an enhanced withdraw benefit. Need guidance on this matter.
Permalink Submitted by Alan Spross on Mon, 2012-03-19 22:46
If she maintains the inherited IRA annuity, she can roll any distributions taken to her own IRA other than any RMD required.
An RMD would be required of her only for :
1) The amount of husband’s RMD for the year of death IF ANY
2) Her own RMD as beneficiary starting with the year her husband would have reached 70.5. If she failed to take an RMD required of her, she would than be treated as the owner of this inherited IRA. If inherited any other IRAs, she could satisfy any RMD required as beneficiary of THIS IRA from the other IRA, if also inherited from her husband.