disclaim IRA
I have a client who is the beneficiary of her fathers traditional IRA. Her brothers we also suppose to be listed but were not. Can she disclaim 2/3 of the IRA and would that portion go to the estate or could it go directly to the other siblings. Thanks…
Permalink Submitted by Alan - IRA critic on Wed, 2024-06-12 22:17
A partial disclaimer can be done, but the 2/3 disclaimed cannot be redirected to anyone who is not a contingent beneficiary on the account or a default beneficiary under the IRA agreement. That agreement should be checked to determine the default beneficiary(s), but most likely it will be father’s estate. If father passed prior to RBD, that would trigger the 5 year rule, an unattractive result but not as unattractive as it used to be because even if they were named the siblings will only get 10 years.
If the amount is small enough, the client could just accept the full account and then take taxable distributions and gift a tax adjusted amount (subject to the 17k gift exclusion) each year.
As such, it boils down to a choice between two unsatisfying options.
Of course, father may have intended this for some reason. For example, he may have given lifetime gifts to the brothers and this balances the scales in his eyes.