IRA owner passes and wife beneficiary never took possession and subsequnetly passed

Submitted by JKid on Fri, 2019-01-04 21:12

A husband passed away with his (second) wife as named beneficiary of the IRA. She never took possession of the IRA. It was neither re-titled in her name nor did she treat it as a beneficiary IRA. She passed several years later. Does the IRA go to her estate or to the original successor beneficiaries (his kids). Are their any tax penalties because nothing happened?



Submitted by Alan - IRA critic on Fri, 2019-01-04 23:21

  • Technically, penalties are due by the IRS rarely pursues such penalties from decedent’s estates. The IRA would now go to her estate. Under the circumstances it is very surprising if the IRA account was not escheated to the state due to this long a period of inactivity unless the IRA owner would not yet have reached 70.5. If the IRA is still with the same firm, it should be re titled and death certs from both spouses will be needed.
  • If it has been distributed and sent to the state, following is the latest guidelines including a 1099R distribution reported to the original owner. Not sure what would become of that, but the 1099R should be issued for the owner at the time of escheatment which would be her estate that the custodian is not even aware of. Probably thousands of unresolved 1099R forms will likely be floating around soon.
  • http://news.cchgroup.com/2019/01/02/ira-escheat-reporting-withholding-form-1099-r/

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