18 Tuesday Feb 2020
Posted in Estate
Tags
10-Year Rule, Account Owner, Inherited IRA, Non-Spouse Beneficiary, RMD, Secure Act, Single Life Expectancy, Stretch IRA, Traditional IRA
To improve retirement security for many Americans, congress passed the Secure Act on December 20, 2019. The Secure Act changes some rules relating to the Traditional IRA and the Inherited IRA. Naturally, with any change in legislation, there are benefits and costs associated with the change.
07 Monday Nov 2016
Posted in Estate
Tags
Annuity, Annuity Claim Statement, Beneficiary, Certified Death Certificate, Claims, decedent, Estate as Beneficiary, SEP-IRA, Traditional IRA
While wrapping up work on the traditional IRA, closing the annuity was next on the administration plan. The annuity was kind of mysterious because I never found the policy. Earlier in the administration, while in the interim, I did find distribution statements for the annuity, which described the annuity as a Flexible Premium Deferred Annuity – (SEP-IRA). So, I assumed the decedent – who was self-employed – used the annuity as a retirement plan, which would classify the annuity as a qualified annuity. However, since I had limited knowledge of annuities, a call to the insurance company was necessary.
24 Monday Oct 2016
Posted in Estate
Tags
5-Year Rule, Beneficiaries, Beneficiary, Custodian, Executor, Inherited IRA, Inherited Traditional IRA, IRA, Lump-Sum Distribution, Stretch Rule, Traditional IRA
After closing the safe deposit box, closing the traditional IRA was the next task in the administrative plan. Earlier in the administration, while in the interim, I called the custodian of the traditional IRA to inform them of my Uncle’s death. The representative I talked to realized that accomplishing anything at this time wasn’t possible because I haven’t received approval to act as executor. So, at the end of the call, the representative said, “When you receive your approval letter call back and we’ll discuss the IRA.” After the call, I put aside the matter of closing the traditional IRA.
After a few weeks passed and since been approved as executor, the bank sent me a letter in early December, 2012. In short, the letter served as a reminder that a meeting was necessary to discuss options regarding the IRA and to set a meeting as soon as possible. After I read the letter I asked myself, “What options? Are all the options to close a decedent’s IRA available even with no beneficiaries?” The only option I thought available at the time was to take a lump-sum distribution for an IRA with no beneficiaries. So, soon after I closed the safe deposit box, I called the representative to set the meeting.
17 Monday Oct 2016
Posted in Beneficiaries
Tags
5-Year Rule, Beneficiary, decedent, Distribution Rules, Early Withdrawal Penalty, Estate as Beneficiary, Executor, Inherited IRA, Inherited Traditional IRA, IRA Owner, Required Beginning Date, Required Minimum Distribution, Traditional IRA
When a traditional IRA owner dies, it’s not unusual for an executor to realize that the estate is the beneficiary of the inherited traditional IRA. Whether the traditional IRA owner forgot to complete the beneficiary form, forgot to replace a deceased beneficiary on the beneficiary form, or purposely named the estate as a beneficiary, the executor must handle the inherited traditional IRA for the estate. Unfortunately, most common executors, when the estate is the beneficiary, will assume that the only option to close the IRA account is to take a lump-sum distribution. This results in higher taxes on the distribution, and the estate beneficiaries lose years of growth opportunity for the account. Regardless, what many common executors don’t know is that there are other options in handling the inherited traditional IRA when the beneficiary is the estate.