IRS account left to an estate
A beneficiary of an Simple IRA doesn’t want to inherit the account from her deceased brother. She is thinking of disclaiming the IRA and letting it be distributed to the sons of the deceased through the will. What are the tax ramifications of such a strategy and when will the taxes be due.
Thanks
Permalink Submitted by Alan - IRA critic on Tue, 2021-07-27 20:09
Before disclaiming, she needs to check the IRA beneficiary provisions to verify that the IRA will go to the account owner’s estate if she disclaims. Then the will must be checked to determine who will inherit the IRA under the will provisions. If she (disclaimant) is also named under the will, she must also disclaim her interest in the IRA funds that she would re-inherit under the will, or the disclaimer will not be qualified.
Once the above details are checked off, if the executor of the will is able to assign the inherited IRA to the sons in the form of individual inherited IRAs for each, they will be subject to the 5 year rule if brother passed prior to his RBD, and brother’s remaining life expectancy if he passed on or after his RBD. This situation remains the same as prior to the Secure Act. Note that a disclaimer must be filed within 9 months of brother’s death, and therefore sister’s age would no longer be a factor in determining the inherited IRA requirements.