Spousal Primary Beneficiary dies shortly after Spouse IRA owner
An IRA owner passes away. She had her husband as the primary beneficiary and her children as the contingent beneficiaries. Her husband passes away eleven days after she does. His wife’s IRA was not rolled into his yet. He had his wife as his primary beneficiary and their children as the contingent. I know that he is considered the owner of her IRA, however, how should the money from her IRA be distributed? Can it just pass to his contingent beneficiaries or must it be a part of the estate? When it goes into the beneficiary IRA, is the deceased named the wife or the husband? Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2021-03-12 02:09
For her IRA, the husband is treated as the designated beneficiary for RMD purposes unless his executor files a qualified disclaimer within 9 months of his wife’s death. In that case, the children would be treated as designated beneficiaries, but for deaths under the Secure Act they would probably be subject to the 10 year rule. The procedure for the disclaimer may vary by jurisdiction.
Without the disclaimer, the IRA he inherited would go to his estate, and would have to be distributed under the 10 year rule. Note that the 10 year rule applies to any entity or person who inherits upon the death of an eligible designated beneficiary (husband). The executor could still assign the inherited IRA out of the estate to the beneficiaries of the estate, who could utilize the 10 year rule.
Husband’s IRA is simpler, as it would go to the children as contingent beneficiaries, who would also be subject to the 10 year rule other than those who are disabled or chronically ill.