Non-spousal Beneficiary not moving account into own Beneficiary IRA

Submitted by Wendy Mommaerts on Wed, 2016-05-11 17:11

Our client passed away Jan 2016 and has named her children has primary beneficiaries. All but one of the four beneficiaries has transferred their awarded portion into their own beneficiary IRA.

Is there a time frame on when the remaining beneficiary needs to transfer or withdraw their portion?

For RMD purposes, Is there a time frame for the remaining beneficiary to name his/her own beneficiary?

in 2017, How do we handle the non-spousal beneficiary RMD if the funds are still in the mother’s IRA account?



Submitted by Alan - IRA critic on Wed, 2016-05-11 18:05

  • There is no time limit for the remaining beneficiary to act, but they still have to meet RMD requirements or incur a penalty. The first beneficiary RMD is due by 12/31/2017, even if that beneficiary has failed to return required paperwork, SSN, address etc. If client passed prior to RBD, the remaining beneficiary may also elect the 5 year rule in writing, but custodian would not accept that until the basic information was provided.
  • If remaining beneficiary does not have the account re titled, they cannot name a successor beneficiary and if that occurs the death benefit would go to beneficiary’s estate should beneficiary pass before acting.
  • Beneficiary cannot receive an RMD or any other distribution until the account is properly titled. That could result in a 50% excess accumulation penalty unless the IRS approves a waiver request on Form 5329. Beneficiary has plenty of time to act, but the longer they procrastinate the more likely this will not get completed in time.

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