IRA Disclaimer (2019 death & 2020 disclaimer) and unborn child as recipient of disclaimed property
Here’s the situation. IRA owner (age 90) died 11/30/2019 leaving her IRA to her children in equal shares, per stirpes. One beneficiary plans to disclaim his interest which would pass then pass in equal shares to his 2 children (both adults.) One child, #1, also plans to disclaim and her interest would be split between her 2 children (both minors, ages 2 & 5.) The other child, #2, is expecting her first child in February 2020. Q1: If the disclaimer didn’t occur until 2020, do the 2019 stretch rules still apply? Q2: Can the disclaiming parent be the custodian for the inherited IRAs for each of the children. Q3: If child #2 disclaims after her baby is born, (and before the 9 month deadline), can her interest pass to her baby that was wasn’t born at the time of the IRA owner’s death.
Thanks for your help!
Permalink Submitted by Jose Morales on Thu, 2020-01-23 00:02
The beneficiary options are set based on the date of death of the IRA owner. Since they passed away in 2019 they are not subject to the SECURE act changes and would fall under the “old” rules. The disclaiming parent could be the guardian or responsible person named to act on behalf of the children that have the inherited IRAs. Assuming the first disclaimer was done in a timely manner (within 9 months of the passing of the IRA owner) the child would have until 9 months after they reach the age of majority to disclaim themselves. You would need to have very good documentation to provide the IRA Custodian if there is any intention of stretching the disclaimer period beyond the near future.