Can an estate close when an estate IRA BDA account is transferred to individual IRA BDA’s?
I have a client who passed away in November 2020 and had an IRA with no named beneficiary. We established an Estate IRA BDA account to receive the dollars and now would like to split the Estate IRA BDA into 5 separate IRA BDA accounts for the decedent’s remaining siblings. I understand all accounts need to be liquidated by 12/31/2025 and the assets are still viewed as a part of the estate. My question is can the estate be closed and the decedent’s siblings maintain their respective IRA BDA accounts until the end of 2025 if they so desire? Or do the IRA BDA accounts need to be liquidated for the estate to be closed? The decedent resided in Florida and this is where the estate is being administered. Thank you in advance for your assistance.
Permalink Submitted by Alan - IRA critic on Fri, 2021-09-24 17:22
The estate can be closed once all assets in the estate including the inherited IRAs have been distributed to estate beneficiaries in kind. Assignment of the IRA is treated as a distribution from the estate even though the IRA balance remains to be distributed to the beneficiaries. The beneficiaries must drain the inherited IRA by the end of 2025 only if the client passed prior to their RBD. Some IRA custodians will resist the assignment process, so hopefully you are not dealing with one of those.