deferred comp account with no beneficiary
Person dies in 2019 with a deferred comp plan and annuity with no named beneficiary. The accounts assets are distributed to the estate of the decedent. As per the person’s will, the deceased person’s daughter will inherit all assets of the deceased. Can the deferred comp portion of the assets be rolled into an inherited IRA and therefore potentially stretching the payout and tax liability as well as avoiding the distribution of the assets being subject to the state inheritance tax liability of the estate?
Permalink Submitted by Alan - IRA critic on Wed, 2020-05-13 18:38
Once a distribution is made to the estate, any available stretch is lost. There was never an option to do a direct rollover from the DC plan when the estate is the beneficiary. Therefore, daughter will inherit this lump sum but it will all be taxed in the year of distribution from the plan. Same is true of the annuity. The provisions of the state inheritance tax will also apply to the inherited assets.