The default beneficiary provisions of the IRA must be determined to see if any surviving spouse or children would be the default beneficiary, even though the estate is the typical default beneficiary. If it’s the estate, the executor may be able to assign the inherited IRA out of the estate to separate inherited IRAs for the beneficiaries under the will or perhaps to any intestate beneficiaries. If that is completed soon enough, there will be no need to make distributions to the estate itself, and distributions to the beneficiaries would be reported and taxed to those beneficiaries rather than the estate. Or if a distribution is made to the estate, it would be taxed to the estate unless the executor passes it through the estate to the estate beneficiaries. If the executor uses the distribution to pay estate expenses, the distribution will be taxed to the estate less any deductible expenses.

None of the above affects the RMD requirements. The 5 year rule applies if the taxpayer passed prior to RBD, and the taxpayer’s remaining life expectancy applies if they passed after the RBD.  This would also apply to an inherited IRAs for each beneficiary due to executor assignment.

• Flag as spam
• Log in to Reply