Annuity IRA left to Estate
My client passed away in 2024 with an IRA VA that was left to her estate. She had already started taking RMD’s. The plan was to transfer the VA to the Estate IRA via the death claim so that we could send the RMD via the “ghost rule” to the beneficiaries of the estate each year.
The VA company is telling me that due to the fact the beneficiary is the estate the only option we have for the claim is a lump sum check to the estate. If that is the case, is it possible to do a 60 day rollover for an estate IRA or is there other options?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2025-03-12 13:30
While most executors would not want to keep the estate open for more than a year, most IRA custodians would cooperate and not require a total distribution. The insurance company is taking the approach that almost all qualified plan administrators do, that is to make a total distribution as soon as possible.
Once the distribution is made, is it irrevocably taxable and it cannot be rolled over. Nonetheless, it is amazing how many estates inherit retirement plans.
While unlikely to be successful, the only possible solution would be to approach a brokerage IRA custodian to determine if they will allow the executor to establish an inherited IRA to receive a transfer of the balance from the insurance company (before they cut a check). The brokerage would also have to then be willing to accept an assignment from the executor to separate inherited IRAs for each estate beneficiary. Once that is done, the estate could close.
Brokerage IRA custodians will usually accept assignment from executors, but perhaps only when they already hold the inherited IRA. They may not want to accept a transfer from another firm when they didn’t hold the decedent’s IRA. The balance in the IRA should be high enough to justify the additional transactions given the added work and small chances of success.
Inherited IRAs are generally not attractive to IRA custodians because they are wasting assets, subject to tricky RMD rules, and possibly to litigation when estates are involved.