Time Limit on Spousal Claim of IRA?
I have a client whose wife passed away in 2012 and just learned of some Traditional IRA CDs at a credit union that he never claimed. They are still in her name and have simply rolled over every year. I don’t know why the credit union would have allowed this since they would have been notified of her passing by the SSA. Regardless, the rep at the credit union is telling him that he needs to do an inherited IRA since he did not perform the claim “timely”. I have not heard of that before in a situation like this.
Her DOB was 6/12/1955 and his is 3/23/1956 for what it is worth. I was going to advise him to just have the assets transferred to his IRA as a spouse, but I have never ran into this possibility before (I have never seen someone wait 12 years).
Is he really out of luck in just moving to his own IRA? Given their ages it isn’t that big of a deal I guess, but it would be easier for him to just consolidate.
Thanks.
Permalink Submitted by Alan - IRA critic on Tue, 2024-05-07 00:19
There has been no time limit to elect to assume ownership, and even though the proposed Secure Act rules intend to place a time limit on the election, with their DOBs they would not yet be subject to that time limit which would not kick in until the year he turns 73. Therefore, there is no reason that he cannot elect to assume ownership. If they still resist, he could establish an inherited IRA, then transfer it to another custodian, after which he could assume ownership. Whether these CD maturity dates effect the CU’s indication is underdetermined.
No beneficiary RMDs would have been required until the year she would have reached 73, so he would not have defaulted to ownership under the failed sole beneficiary RMD rule.
He may be fortunate that these IRAs did not escheat to the state if there has been no contact with the CU, so he should act fast to prevent that from happening.