Death with no Beneficiary
Peggy died at age 82, shortly after her husband’s death, and had only named him as her beneficiary with no contingents. Her will would have her IRA divided equally among them. Can they continue what would have been her RMD schedule and take distributions over the next seventeen years?
Permalink Submitted by Alan - IRA critic on Fri, 2020-10-02 16:09
What was her DOD? Assuming the IRA agreement default beneficiary is her estate, then her will determines where the estate inherited IRA will go. Who are the beneficiaries of the will, her children?
Permalink Submitted by Bob Foland on Fri, 2020-10-02 17:37
-DOD was 7/19/20. -I have been operating on the assumption that the default beneficiary is her estate. Can’t think of a reason that it would be otherwise.-Her three daughters are to be equal heirs by the terms of her will.-Given that there were no named beneficiaries, my concern is that they can only use the five-year rule. I just wonder if I’m grasping at straws in wondering if they can use Peggy’s remaining life expectancy.
Permalink Submitted by Alan - IRA critic on Fri, 2020-10-02 20:01
They could use her remaining LE, but only Table I. If the estate is the beneficiary, the Secure Act does not affect the distribution period. Since Peggy passed after her required beginning date, the estate beneficiaries must use Peggy’s remaining single life expectancy. If she would still have been 82 at year end, the initial RMD divisor for the beneficiaries starting in 2021 will be 8.1. So they will have only 8 years to drain the inherited IRAs. The executor should assign the IRA out of the estate to individual inherited IRAs for each daughter to manage. In the unlikely chance that the IRA agreement indicated that the children would inherit if there was no spouse, then the IRA would not pass through the estate, and the 10 year rule would apply to the inherited IRA accounts. Not much difference.