IRA paid to an estate
My client’s husband passed away 12 years ago. The custodian that was in play when her husband was alive changed after his death. My client did not respond during the last 12 years and the new custodian has no beneficiary on file. We believe the previous custodian did have a beneficiary arrangement since is was an employer sponsored plan. 2 questions:
1. Assuming the IRA is paid to the estate, how is this taxed?
2. The previous employer is a large university and my client has not been able to work through the maze to find somebody that could help with confirming if her husband had a beneficiary arrangement on file. Any ideas on how to help the client or is she just going to have to deal with it being paid to the estate since she did not take action for so long?
Permalink Submitted by Alan - IRA critic on Mon, 2022-06-20 17:31
Permalink Submitted by Robert Witt on Mon, 2022-06-20 23:03
I honestly don’t think the IRA custodian even knows about the husband’s death. The IRA is in his name, not inherited. The client is under age 70 and the deceased husband would have been also (passed when he was 50). The custodian has no beneficiary on file. Your right – a mess for sure. The value is around $400k and has been sitting in a money market for 12 years. Ugh!
Permalink Submitted by Alan - IRA critic on Tue, 2022-06-21 03:40
Since decedent apparently rolled over the university plan to this IRA before passing, whoever was the named or deemed beneficiary on the university plan no longer matters. Perhaps not having reached RMD age is what saved this account from being escheated to the state. While the IRA beneficiary clause still needs to be checked to see if the client might be the default beneficiary, odds are that the estate is the beneficiary and the 5 year rule applies. Did decedent have a will naming his spouse as beneficiary?