Traditional Ira Non spouse Beneficiary Account Set up
When inheriting a Traditional Ira as a Non spouse Beneficiary from a decedent who had already begun taking RMDs, I know the title on the account must at least include the name of decedent, an indication that the account is an IRA beneficiary distribution account, and the inheritor’s name and that the 1099-R must show a code of 4 in Box 7 in, but should the whole account title also appear on the RMD check (or advice statement if direct deposit) or is just having the beneficiary’s name enough? Is there anything else on the RMD check (or advice) that should be there to indicate that it’s being processed correctly as a death distribution to the beneficiary to avoid penalties? Also, is there anything else in terms of coding on the original paperwork to check to make sure it’s set up per IRS requirements to avoid penalties? Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2016-10-17 21:37
The check can be made out just to the beneficiary, but the 1099R is critical. It needs to show the gross distribution, the code 4 and the SSN of the beneficiary along with the account number. The IRS does not care about the order of the account registration as long as it identifies both the beneficiary and the deceased owner.
Permalink Submitted by Cheryl Van Beek on Tue, 2016-10-18 00:36
Thank you for being so helpful.