IRA paid to an estate

Submitted by Robert Witt on Mon, 2022-06-20 15:59

My client’s husband passed away 12 years ago. The custodian that was in play when her husband was alive changed after his death. My client did not respond during the last 12 years and the new custodian has no beneficiary on file. We believe the previous custodian did have a beneficiary arrangement since is was an employer sponsored plan. 2 questions:

1. Assuming the IRA is paid to the estate, how is this taxed?
2. The previous employer is a large university and my client has not been able to work through the maze to find somebody that could help with confirming if her husband had a beneficiary arrangement on file. Any ideas on how to help the client or is she just going to have to deal with it being paid to the estate since she did not take action for so long?



Submitted by Alan - IRA critic on Mon, 2022-06-20 17:31

  • If client did not respond for 12 years, it is amazing that this IRA was not escheated to the state. How and when were the funds rolled from the employer plan to an IRA? Is the IRA titled as inherited or is it still in the name of husband? What about beneficiary RMDs? Has the IRA agreement been checked to determine the default beneficiary, as it might be the surviving spouse?  There are plenty of private letter rulings allowing a surviving spouse who is the beneficiary of decedent’s estate to roll a distribution to the estate into her own IRA, but the estate would have to be reopened or opened for the first time. This is a real mess, and to unwind it, the entire history starting with the husband’s death would have to be reconstructed with dates and events. 


Submitted by Robert Witt on Mon, 2022-06-20 23:03

I honestly don’t think the IRA custodian even knows about the husband’s death. The IRA is in his name, not inherited. The client is under age 70 and the deceased husband would have been also (passed when he was 50). The custodian has no beneficiary on file. Your right – a mess for sure. The value is around $400k and has been sitting in a money market for 12 years. Ugh! 



Submitted by Alan - IRA critic on Tue, 2022-06-21 03:40

Since decedent apparently rolled over the university plan to this IRA before passing, whoever was the named or deemed beneficiary on the university plan no longer matters. Perhaps not having reached RMD age is what saved this account from being escheated to the state. While the IRA beneficiary clause still needs to be checked to see if the client might be the default beneficiary, odds are that the estate is the beneficiary and the 5 year rule applies. Did decedent have a will naming his spouse as beneficiary?



Add new comment

Log in or register to post comments