Disclaiming Mom’s IRA
Hello,
Three sisters inherited their mother’s IRA and non qualified annuity. Two out of the three sisters receive state government assistance and have been told by an attorney they will lose their benefits if they receive the inheritance and IRAs.
They are on board with disclaiming their interest to the third sister in order to not lose benefits.
By disclaiming their beneficial interest will the sisters who disclaim receive any tax consequence or 1099R?
Or, will the third sister be the one who takes on all of the tax consequences?
Is there a taxable event taken on by merely disclaiming?
Thank you
Permalink Submitted by Alan - IRA critic on Wed, 2022-09-14 21:53
Disclaimers are not taxable events. FIrst, the contracts should be checked to determine the default beneficiaries resulting from a disclaimer or a beneficiary pre deceasing the account owner to be sure it is the remaining designated beneficiaries. If so, IRA beneficiary RMDs and any other distributions will be paid to the non disclaiming beneficiary and reported on a 1099R to such beneficiary. For the IRA, any remaining year of death RMD must also be distributed to such beneficiary. Suggest having the attorney verify that disclaiming itself will not impair the govt benefits.