Distribution after Death- Whose many is it?
Client dies January 15th, 2021. He was already taking his RMDS. Jackson National, custodian of his IRA distributed his annual RMD on February 1, 2021 because he was on automatic RMD withdrawals.
Deceased had 4 children but only designated one son as his sole beneficiary. Son’s attorney is contending that his client is entitled to that IRA distribution and is willing to pay the taxes for this amount, since his client would be inheriting the IRA.
I contend that the RMD distribution belongs to the estate of the deceased IRA owner and not the sole beneficiary.
The other 3 adult children say that RMD belongs to all of the 4 children . The amount is not huge . It is $35,000.
Is it possible to return this RMD back to the IRA since it should not have been distributed . Jackson sent the distribution without knowing the person had died.
Please settle who is the owner of that RMD distribuition?
Permalink Submitted by Alan - IRA critic on Fri, 2021-07-30 18:02
The named beneficiary son owns the IRA assets upon client’s death, so son’s attorney is correct. Therefore, the check should be returned to the custodian to be re issued to the son once son has had the inherited IRA retitled in beneficiary format. He will need a copy of the death certificate to do that.
Permalink Submitted by Vickie Intriago on Sat, 2021-07-31 17:32
Does it matter that so much time has lapsed? We are beyond 60 days of the distribution.thank you
Permalink Submitted by Alan - IRA critic on Sat, 2021-07-31 19:05
Good question. Jackson should have their own procedures for handling distributions made to an incorrect (deceased) payee. A stop payment should negate the distribution and the check . It helps that all this has been in 2021 and therefore no 1099R forms have been incorrectly issued. The check is also about to become a “stale dated check” at the 6 month mark, so they may not have to stop payment on it. As such, no rollover is necessary or applicable, it would just be a voided distribution.