The rules can be different for how the estate is handled, depending on what state this takes place in. Thanks for the response. The answer seems complicated so that is why I posted the question to see if you had any advice. I am the sole beneficiary of my brothers k. None if them are contingent beneficiaries. The plan administrator will not accept the disclaimer, as it was over 9 months since date of death, and cannot be directed to specific people.
Is this a valid disclaimer? No — as the plan administrator has noted, the disclaimer attempt was more than 9 months after the date of death. It would have been, had it been timely. At this stage, your only option is to take distribution of the k as the sole beneficiary. Just understand that you are paying income tax on the distribution, as well as taking responsibility for the income on your tax return, which could affect other matters, such as your Medicare premiums, etc..
If an IRA has only one primary beneficiary but no secondary, can the primary disclaim to someone, or is a secondary required? In that situation if the primary disclaims, the only remainder is the estate of the original owner.
In other words, with no other beneficiary named prior to the death of the original owner, no one else can name a secondary or any beneficiary. Does it go to the surviving spouse then? Notably, There are no disclaimer provisions in the trust. If so, can it rollover without any tax consequences to that surviving spouse? Otherwise, however the trust is designated for distribution will rule. I assume in this response that the trust is a see-through trust, which allows for the beneficiaries to set up separate inherited IRAs for themselves.
Every situation seems to be unique ours is no different. There are several beneficiaries. Can the younger beneficiaries each disclaim a portion of the IRA leaving the funds to the oldest who will not disclaim or does the disclaimed money go back to the estate.
That strategy should work the way you suppose — but I suggest that you talk to an estate attorney to ensure that this is the way it will work in your particular state. My dad died in , and my stepmom was the primary beneficiary of the inherited IRA. My 2 siblings and I are the contingent beneficiaries. If so, are there any other options? Unfortunately the disclaimer must be done within 9 months of the death of the original owner. Can the estate of a deceased person make a qualified disclaimer of an inherited IRA?
For example, two married individuals die within a month of each other. It could be different depending on the state testate laws where this is occurring, as well.
Who are they made to, and who can make them? If not made, the estate will take a big tax hit. Any suggestions here? The effect is the same, just more complicated. Regarding suggestions, not much can be done if the beneficiary is unhappy with his share.
Hi Jim, The blog is great! I have a question about an inherited IRA. My father had an IRA and died in December at age My mother was the primary beneficiary on the account, but died in April at age 75 before transferring the account into her name. I am 40 years old and was listed as the contingent beneficiary. The account transferred from my father directly to me. Can I apply the stretch provision to the IRA? I am not an attorney so my opinion is only my opinion, it carries no weight or authority.
I have a sibling who is an equal co-beneficiary of the estate and contingent beneficiary on the account. The assets were split equally and transferred directly to inherited IRA accounts in our names. He recently passed after marriage to my daughter, but before updating his beneficiaries. Your thoughts would be appreciated. If your daughter was never named as a beneficiary of the account, she will not likely be allowed to take this on as a spousal beneficiary.
The primary beneficiary was my father who is also deceased. In addition, I have 3 sisters. After the death of the owner of the account no new beneficiaries can be named.
Hi our situation is a little complicated. My step father passed away and my mother is his beneficiary and I am the contingent, but she passed 3 months later. Is this the way it works? Thanks for any information you can give me. So if your mother had not named beneficiaries for the account, then her estate is the beneficiary after her death. Hi, my brother passed away, never married, had IRA accts of which I am sole beneficiary.
I am also successor trustee and sole beneficiary on trust too. I am trying to find greatest tax advantage here. If I disclaim, according to my understanding, it falls to estate, which is me also, so is there no way to pass this down to my children besides taking the RMD and then gifting it to them post taxed? Unfortunately, none that I know of. It seems plausible to me, but I am not an attorney. Will the institution have a form letter that they require? Some custodians will have a form letter for disclaiming, but if yours does not, you may want to have an attorney draft a letter for you so that you cover the bases properly.
As far as what the contingent beneficiary must do, once the custodian has accepted the disclaimer, he or she would just set up an inherited IRA at the custodian of choice and submit the paperwork to rollover the funds to the new account. And not go back to the original remaining 4 beneficiaries? Most likely in a case like this, the disclaimer redirects the account to the four remaining beneficiaries.
The contingent beneficiaries or per stirpes as is the case here only apply if that particular beneficiary has pre-deceased the original owner. For example, surviving spouse is primary beneficiary. Four children are contingent beneficiaries. I suspect it will have to distribute it evenly. Resend the verification email. If you're still having trouble verifying your email address, feel free to contact us at If you are a registered user, but have forgotten your LordAbbett.
Once your email address is verified, we will send you an email with instructions on how to reset your password. An email has been sent to with instructions on resetting your password. Your LordAbbett. This page will be refreshed after 3 seconds. The idea of disclaiming an inheritance may sound strange at first. Why in the world would someone refuse an inheritance? Good question. Federal tax law recognizes an individual cannot be forced to accept an inheritance.
So, if a primary beneficiary inherits an IRA or qualified plan, that individual has the option to disclaim the inheritance under IRC Section b , which is the formal and irrevocable refusal to accept a gift or inheritance at the death of the account owner.
If the rejected bequest is executed correctly, the disclaimant will be treated as having predeceased the primary beneficiary. In that case, the inheritance would be passed directly to the contingent beneficiary. The contingent beneficiary is the individual who would have been entitled to the benefits if the disclaimant had predeceased the participant. When a beneficiary elects to disclaim inherited retirement funds, the funds then will pass directly to the next beneficiary entitled to receive the funds.
More important, the inheritance would not be considered a taxable gift to the disclaimant. Disclaimers commonly are used as part of an estate plan and or tax planning. For example, older beneficiaries could consider disclaiming so that they would remain eligible for government benefits, tax deductions, or credits that are means tested. Disclaimers also can play a vital role for those beneficiaries that rely on Medicaid; avoid taxation of social security benefits and the 3.
An often overlooked benefit is that a qualified disclaimer serves as a tax-free gift between the disclaimant and contingent beneficiary. For example, a parent could disclaim, thereby enabling the account to pass directly to their children or grandchildren assuming they were the named contingent beneficiary.
But beware: since a qualified disclaimer is irrevocable, executing a qualified disclaimer is not always an simple straightforward decision. If a contingent beneficiary is not named this is a common occurrence , the account e. In other words, the account may be inherited by someone other than the intended beneficiary. So, be sure to investigate who would receive the inheritance as result of a disclaimer. Remember that the disclaimant cannot specify or control how the account passes.
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Some questions are edited for brevity. Outside the Box Opinion: Can I reject an inheritance? Published: Aug. ET By Dan Moisand. Thinking about retiring early?
Dan Moisand. I rebuilt my life after hitting rock bottom at My estranged daughter says she only wants my money and jewelry.
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