Inherited IRA with the Estate as the beneficiary
The deceased had previously started taking RMD’s, and named her estate the beneficiary. The beneficiary’s of the estate are 3 daughters who share equally. Two of the daughters would like to take their portion of the inherited IRA immediately in its entirety and the 3rd daughter would like to stretch out her portion with distributions taken over several years. The daughters would prefer to have the distributions from this inherited IRA with the estate as beneficiary, taxed to their individual social security numbers and not to the estate’s tax id number. The inherited IRA is the only asset of the estate and they would like to close the estate. They do not want to file an estate income tax return for each year they take a distribution from this inherited IRA. Is there an IRS rule, ruling or a precedent that would allow this?
Permalink Submitted by Alan Spross on Wed, 2012-07-25 17:31
While executor assignment of an IRA from the estate to the estate beneficiary inherited IRA accounts has been allowed all along, here is another recent PLR authorizing it:
http://www.retirementdictionary.com/articles/823/estate-beneficiary-ira-…
If the deceased passed after her RBD, as the link indicates the beneficiaries must take RMDs over the remaining non recalculated life expectancy of the decedent. They cannot use their own life expectancy because the estate was still the named beneficiary on the IRA. The separate accounts provide independent handling and investing, and would allow the estate to be closed. 1099R forms would be issued to the individuals using their SSNs.