Non-US Citizen Beneficiary
I’m working on a matter where we just confirmed the the retirement account is paid to the participants spouse (20%); participant’s daughter (50%) and; participants brother (30%). Brother reside in Iran. Any thoughts on distribution options? Surviving spouse is biologial parent of child. If child disclaims, are funds paid to the “estate” (which is not bad as the spouse is the sole heir). Most concerned about what to do with portion distributable to brother.
Permalink Submitted by Alan Spross on Fri, 2012-11-30 18:34
The IRA agreement should be consulted to determine where the funds go should a beneficiary pre decease which is the result of a qualified disclaimer. More than likely daughter’s share will be pro rated between the other two primary beneficiaries (40-60). That would increase the brother’s share to 60% total. There is a 30% mandatory withholding on payments made to foreign nationals I believe unless there is a favorable tax treaty between the US and the foreign country. With Iran there is no chance of that.
The IRA custodian should be consulted to determine exactly what withholding they will apply in this case.