Does the title of the new inherited IRA need to include the word “IRA?”

Submitted by Cheryl Van Beek on Mon, 2016-12-05 01:55

IRA/Inherited IRA paperwork was filled out, and they have assured me they will show code 4 on the 1099 to indicate Death Distribution for any RMD withdrawals from this account. IRA account has now been transferred due to death as an Inherited Traditional IRA.The title of the new inherited IRA shows the decedent’s name (and parenthetically says “Deceased”) and the Beneficiary’s name (and parenthetically says “Beneficiary”) but it does not say IRA anywhere in the title– is this okay? Thank you again.



Submitted by Alan - IRA critic on Mon, 2016-12-05 02:43

Should not be a problem unless the 1099R reporting distributions does not check the IRA box. Even then if the beneficiary reports the taxable income shown in Box 2a, the IRS will not care, but not having the IRA box checked may have an adverse tax affect with some tax programs. Can you log into the account on line to see if there is any reference made to an IRA there?

Submitted by Clarence Boje on Mon, 2016-12-05 15:09

Good morning.I have 2 questions that require clarification.1.When the spouse dies,what procedure does the remaining spouse have to do to make a bank IRA “their own” and how is the IRS notified of this change?2. When the remaining spouse dies,what exactly has to be done to have the beneficiaries officially have their inherited bank IRA’s named as the owner of an INHERITED IRA and how is the IRS notified ? Thank you

Submitted by Alan - IRA critic on Mon, 2016-12-05 16:25

  • To acquire ownership of an inherited IRA, a sole spousal beneficiary has several ways to acquire ownership. First, having the custodian re title the IRA as owned, second rolling it over to their own IRA or employer plan, third by making a regular or rollover IRA contribution to the IRA, and finally by default through failing to take an RMD required as beneficiary.
  • The IRS is notified by Form 5498 issued by the custodian showing the new title, but this obviously cannot be done until the custodian receives a death certificate and re titles the account. The default method often causes a delay in IRS notification.
  • Surviving spouse should name their own beneficiary ASAP. When the surviving spouse passes, a non spouse beneficiary has the IRA (whether owned or inherited status by surviving spouse) re titled after providing a death certificate and info for the beneficiary including name, address, and SSN.
  • Note that none of these beneficiaries have to notify the IRS themself. The 5498 issued by the custodian will suffice.

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