IRA beneficiaries

Submitted by Donald Jorenby on Tue, 2018-09-04 16:22

I just read the article by Jim Glass and I have a question. If you name a living person “with a pulse” as the beneficiary, is that person automatically considered a “designated beneficiary” because that person is living? Does the beneficiary form HAVE to specify that the named beneficiary is a “designated beneficiary”?

Thank you for your help

Don



Submitted by Alan - IRA critic on Tue, 2018-09-04 17:59

A non individual cannot be a designated beneficiary, but among individuals named as beneficiaries of an IRA, there are various rules to determine which one is considered to be the designated beneficiary on whose life expectancy RMDs are determined.

Submitted by David Mertz on Tue, 2018-09-04 18:40

  • A living individual named on the IRA’s beneficiary form is a designated beneficiary by definition under the law:
  • Section 401(a)(9)(E) Designated beneficiary.— For purposes of this paragraph, the term “designated beneficiary” means any individual designated as a beneficiary by the employee.
  • (In this tax-code paragraph, “any individual designated” means any individual named or unambiguously specified in some other way such as “my spouse.”)

Submitted by David Ryan on Tue, 2018-09-04 23:44

 In his recent article, Jim Glass mentioned having a non-person entity as a co-beneficiary cashing out their portion in the year after death. Do the have to wait until the next year or can it be completed in the year of death thereby allowing persons also named as beneficiaries to then split the IRA and keep the stretch?

Submitted by Alan - IRA critic on Tue, 2018-09-04 23:57

The “beneficiary determination date” is 9/30 of the year following the year of death.  Any individual or non individual beneficiary that has received a 100% distribution of their share by that date or has filed a disclaimer is not considered in determining the RMD for the remaining beneficiaries.  These actions can be completed either in the year of death or the following year up to 9/30. Disclaimers must generally be filed within 9 months from the date of death.

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