IRA Beneficiary Question
Hello,
I have a death beneficiary situation that I wanted by this group. Husband passed away and wife was primary beneficiary. She passed before taking the assets or disclaiming them. Their 2 kids are the contingent’s on both of the couples IRA accounts. For the wife’s IRA was funded from previous contributions so no issue with dividing that up to the 2 kids.
The issue is with the husband’s account and since the wife was the primary and did not accept or disclaim the funds then the default would be for the funds to go to her estate. Do we know if this is an IRS rule or could that vary depending on the B/D?
I’m just getting a lot of push back from an adviser because we can’t move the husband’s IRA until we see the legal document naming the wife’s executor of her estate.
Any thoughts would be greatly appreciated. Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2021-05-21 00:12
Sounds like the 9 month disclaimer deadline for his IRA has passed. If so, then his IRA will go to her estate under most custodian’s beneficiary clause provisions, but that clause should be carefully checked nonetheless. Whoever becomes her executor should be warned not to accept a distribution to her estate unless of course that is needed to pay estate debts etc. The first thing most IRA custodians do in this case is to convince the estate to accept a lump sum distribution which will of course be very tax inefficient and destroy any available stretch. Once the beneficiary is clear, it can be determined what the RMD requirements are in terms of the ages at DOD, whether pre or post Secure Act etc.