Disclaimed deceased girlfriends traditional IRA
My girlfriend passed away on Jan 9, 2018 (birthday 5/08.1952). I was named as the primary beneficiary with no secondary.. Her daughter was named in the will as heir to everything. Per my girlfriends wishes to take care of her daughter, I disclaimed the IRA, but her daughter was not designated as secondary beneficiary. She was told that the IRA would pass to the estate and that in 5 years , she would have to withdraw all funds with a hefty tax bill (present value of about 2,000,000). What should she do to minimize taxes.
thank you,
John Skislak
Permalink Submitted by Alan - IRA critic on Thu, 2018-02-08 17:31
Sorry to hear of your loss. The 5 year rule will correctly apply in this situation, although it is actually 6 years because the IRA does not have to be drained until 12/31/2023. That amounts to about 333,000 per year from the beneficiary IRA assigned to daughter by the estate executor. There will also be earnings generated on the funds daughter invests after taking the RMDs. Is your GF’s estate subject to federal estate taxes? If so, there could be an IRD deduction available on a portion of the IRA distributions.