Beneficiary dies before Inheritance IRA created
Our father died 2 months ago and named all four of his children as beneficiaries of his IRA – we were told all four children needed to make contact before any of the inheritance IRAs were created. One of the beneficiaries died last week – three of the children had made contact, including the one who died. Since the fourth beneficiary had not made contact yet, the individual accounts were not set up yet. The beneficiary who died has a spouse and no children – what happens now?
Permalink Submitted by Alan - IRA critic on Sat, 2022-03-12 04:00
Another IRA custodian with anti consumer processing restrictions, holding several beneficiaries hostage who have no control over other beneficiaries. It’s a rare policy, but there are some such custodians out there. Now, pending review of the IRA beneficiary provisions, the deceased beneficiary’s estate will likely join the 3 individual beneficiaries causing even more delays. Should that beneficiary have a will, the executor of deceased beneficiary’s estate will handle that interest, and most likely the spouse will eventually inherit that share. Unless one of the 4 is disabled, the 10 year rule will apply to all interests, but if father passed after his RMDs began, there will have to be annual RMDs within the 10 year rule. Further, if father was subject to RMDs and did not complete his 2021 RMD, the 4 beneficial interests are jointly responsible for completing that RMD before year end. The 3 remaining children should pressure this custodian to allow separate inherited IRA accounts to be opened ASAP so that each of you will have your own inherited IRA, can name your own successor beneficiary and control how your share is invested.
Permalink Submitted by Jane Sterling on Sat, 2022-03-12 04:18
Thank you for the response – the fourth sibling was planning to make contact but just had not done so yet. The deceased beneficiary did not have a will, and we are hoping his portion can just go to his wife and we can proceed.
Permalink Submitted by Jane Sterling on Sat, 2022-03-12 04:44
Thank you for the response – the fourth sibling was planning to make contact but just had not done so yet. The deceased beneficiary did not have a will, and we are hoping his portion can just go to his wife and we can proceed.
Permalink Submitted by Alan - IRA critic on Sun, 2022-03-13 00:02
DId father pass after his RMDs had begun? If not sure, provide his DOB. Your beneficiary RMD requirements can then be identified once your inherited IRAs are established.