IRA Rules for Undocumented Immigrants
Does immigration status in any way affect the IRA rules? Here is the scenario. Man marries undocumented wife and has her listed as the IRA Beneficiary. The paperwork for her status is in process but technically she is still undocumented. Man suddenly passes away. She is now either taking the IRA as an inherited IRA or under a Tax ID under herself.
Does she have both options? Are the rules any different? Post death of husband she will be moving in with her daughter who is a legal resident and her income will be minimal. So she can withdraw chunks each year without paying any taxes (or minimal taxes) due to her low tax brackets.
Any thoughts and issues in this scenario?
Thank you!
Arek
Permalink Submitted by Alan - IRA critic on Sat, 2022-08-13 16:57
Does she have a SSN? Or ITIN? Or is one of these in process? She may have to wait until she has the required ID for the custodian to set up an inherited IRA or even to make a distribution. At that time she will have the usual spousal beneficiary options and RMD requirements to continue as an inherited IRA or to assume ownership. Generally, an inherited IRA is recommended prior to age 59.5 to avoid the 10% penalty.
Permalink Submitted by Arek Puzia on Sat, 2022-08-13 16:59
Thanks Alan! I believe she has an ITIN already so she should be good to go there. Just wanted to confirm that she would be treated identically as anyone else for distribution rules.