Any advice someone might have on this subject would be greatly appreciated.

“An IRA custodian can limit the options of a non-spouse beneficiary. They could, in fact, offer no stretch and no direct transfer option thus forcing a taxable payout of the inherited IRA.”

https://irahelp.com/slottreport/inherited-iras-when-you-dont-want-check-mail

I’m guessing this is still the case and there is no right we can point to to make a company establish an Inherited IRA.

I am reluctant to enter into an annuity contract (held in a Traditional or Roth IRA) if the terms preclude an Inherited IRA for the beneficiary. Below is the language in the “specimen contract” I have. I am not sure what differences there are between in and the actual contract.

DEATH PAY-OUT PROVISIONS
Annuitant’s Death – The Death Proceeds payable equal the Cash Surrender Value on the Annuitant’s
date of death. If Annuitant and Owner are the same We pay out the entire Death Proceeds in a lump sum
unless:
1) It is payable to the Beneficiary over a 5 year period. Entire Death Proceeds must be paid
within 5 years;
2) The designated Beneficiary is the Owner’s spouse and he or she continues the Contract in his
or her name as new Owner.

DEATH PAY-OUT PROVISIONS [Paragraph 3 = proposed modification]
Annuitant’s Death – The Death Proceeds payable equal the Cash Surrender Value on the Annuitant’s
date of death. If Annuitant and Owner are the same We pay out the entire Death Proceeds in a lump sum
unless:
1) It is payable to the Beneficiary over a 5 year period. Entire Death Proceeds must be paid
within 5 years;
2) The designated Beneficiary is the Owner’s spouse and he or she continues the Contract in his
or her name as new Owner.
3) It is payable to an Inherited IRA or Inherited Roth IRA, whichever is applicable, for the benefit of the designated beneficiary(s); and then upon creation of the Inherited IRA or Inherited Roth IRA, transferred to another financial institution.

From a business standpoint, I can understand if a company does not want to administer a stretch IRA for decades. However, given how advantageous a stretch IRA can be to a beneficiary, it seems like good business to at least give them that option somewhere else. From what I’ve read, it sounds like the Inherited IRA must be created by the company where the annuity was, i.e., the insurance company just can’t send the amount of the death benefit to another company and then the beneficiary titles the Inherited IRA once the funds are received. For example, the Charles Schwab Inherited IRA application has a box for:

“Transfer the assets from an existing Inherited IRA at another financial institution.”

Based on your experience, do you think there are insurance companies out there that would make an exception for a customer who requests an Inherited IRA option? Or do you think the chances are more like slim to none?

Perhaps companies would be more amenable if all they had to do was cut a check to another company instead of directly to the beneficiary. But that isn’t possible, is it? There’s a little more work involved to create and title an Inherited IRA and I’m afraid that might be a deterrent.