Wrong amount to IRA-BDA
The original IRA custodian sent the total value of the account to my beneficiary’s account. It was supposed to be split between him and his brother. What is the best way to correct?
If the beneficiary designation on the decedent’s account lists two equal beneficiaries and that custodian transferred 100% to one beneficiary, then that custodian should send a letter with a copy of the account beneficiary designation to the new inherited IRA custodian explaining that they made an error and should have only transferred 50%, and therefore are requesting that 50% be transferred back to the first custodian, who can then transfer it to the second beneficiary.
But if the decedent made the error and neglected to list both children as beneficiaries, then the custodian has no choice. The child that received 100% will have to work out a way to take larger distributions and gift the tax adjusted amounts to the other, or determine if a disclaimer will work. With a 50% disclaimer along with a disclaimer of that interest from decedent’s estate, the second beneficiary could inherit their 50% through the estate, although if parent passed prior to RBD, the 5 year rule would apply.
Permalink Submitted by Alan - IRA critic on Tue, 2021-06-01 20:08
Were each of them listed as 50% beneficiaries on the IRA beneficiary clause? The custodian must proceed according to the named beneficiaries and/or the beneficiary default provisions if the designation is not clear.
Permalink Submitted by Jeff Gaeth on Wed, 2021-06-02 20:04
to just one.