inherited ira death of beneficiary
Client passed away several years ago and we set up an inhertied ira for the beneficiary. Account title reads Jane Doe inherited ira as beneficiary for John Doe. John Doe is the original decedant. Now Jane Doe has passed away who was the original beneficiary, her son is the beneficiary of her inherited ira. How should the registration of the account read? Thank you.
Permalink Submitted by Alan Spross on Tue, 2012-04-17 00:27
The IRS has finally realized that there are now thousands of successor beneficiaries on IRA accounts. The current edition of the 1099R/5498 Inst on p 16 deals with how the 5498 should be issued. As such we can also assume that the preferred title format should conform to that. The original IRA owner’s name should be dropped and the new title should read “(Successor beneficiary) as beneficiary of (designated beneficiary now deceased)”. In your example it would be “Jason Doe as beneficiary of Jane Doe”. John’s name would drop off. However, it does not appear that this format will facilitate the IRS knowing that Jason does not get a new stretch for his RMDs and must continue Jane’s RMD schedule.
It is also unlikely that most custodians processing platform will have room to show all 3 parties including two decedents. That said, even the new recommended format could cause some issues for certain custodians, so the custodian may require some modification of the preferred wording for the 5498 form.
Permalink Submitted by David Pater on Tue, 2012-04-17 15:17
thank you