IRA beneficiary death
Here’s the situation. Husband passes away, leaves the IRA to his wife (his IRA is set up with Wife as primary beneficiary and 2 children contingent beneficiaries). Wife passes away 40 days after husband, without taking any action on the IRA.
The children want to stretch it. I think the children as contingent beneficiaries of their fathers IRA has no bearing on this, correct? The only way they can stretch this is to have the estate of the mother disclaim the IRA from her husband.
Is my thinking on this correct or is there another way to best achieve the children’s goals?
One other fact, the Wife/mother, does have her own IRA with the children as contingent beneficiaries – they obviously can stretch that one.
Permalink Submitted by Alan - IRA critic on Wed, 2018-11-07 16:35
Yes, you are correct. With a qualified disclaimer the children will be treated as designated beneficiaries and can create separate accounts using their individual life expectancies for RMDs. Also, for the IRA the wife owned all along, since husband pre deceased, the children she named as contingents will be treated as designated beneficiaries. However, due to the disclaimer on the husband’s IRA, the children will be treated as inheriting these IRAs from different parents, so they cannot aggregate their RMDs or combine the inherited accounts. Finally, any RMD for the year of death that the parents did not complete before passing must be distributed by the children.
Permalink Submitted by Bruce Steiner on Sun, 2018-11-18 02:46
In some states, an executor needs court approval to disclaim. If that’s the case, allow sufficient time to obtain court approval.