Estate Listed As Beneficiary

Submitted by james clemensen on Mon, 2023-05-29 08:03

New relationship; mother (age 80) died with a Prudential IRA Annuity that had the beneficiary listed as ‘Estate’

I don’t want to distribute the money ($100,000+) and have it taxable to the Estate because of the horrendous tax rate, and Prudential won’t do direct rollovers to Inherited IRAs belonging to the estate beneficiaries

My gameplan is to open an Inherited IRA on behalf of the Estate with a Tax ID Number at Prudential, move the funds in-kind via a transfer to a more accommodative custodian that then allows me to have each beneficiary open up a Non-Spouse IRA BDA account and divide the Estate Inherited IRA account by percentage amongst the beneficiaries via the letters testamentary and a letter of instruction signed and dated by the executor

My question is, with this unusual walk to the Non-Spouse Inherited IRAs through the Estate Inherited IRA what beneficiary category that applies; its the typical Non-Eligible Designated Beneficiary (NEDB) and not a Non-Designated Beneficiary (NDB)?

https://irahelp.com/slottreport/3-ira-beneficiary-categories-%E2%80%93-again-and-again-and-again



Submitted by Alan - IRA critic on Mon, 2023-05-29 15:01

  • Since the estate inherited this IRA, the NDB status applies regardless of assignment of the inherited IRA out of the estate to the estate beneficiaries. Therefore, each beneficiary will have the same divisor as the others. The estate or beneficiaries thereof are also responsible for completing mother’s  year of death RMD if that had not been done . For the year after the year of death, the first divisor is based on the single life table for mother’s age in the year of death reduced by 1.0, since these RMDs begin in the year and the year of death. Therefore, assignment has no effect on the divisor, but does give each beneficiary full control over their own separate inherited IRA.
  • While perfectly legal, some IRA custodians resist executor assignment requests, so you will have to search out a custodian who will both execute the direct transfer and then accept assignment. The larger firms are more likely to cooperate, life insurers probably less likely. 


Submitted by james clemensen on Tue, 2023-05-30 21:30

So rather than the typical 10 year rule; we should apply the single life expectancy Ghost Rule?



Submitted by Alan - IRA critic on Tue, 2023-05-30 23:42

Yes, and sometimes the ghost rule produces a better result if the decedent is not too old.



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