As soon as the surviving spouse submits documentation to establish an inherited IRA, they have full control over distributions, investments, beneficiaries, etc. from the inherited IRA, and from their own IRA if they elect to assume ownership.
The problem with automatic distributions for IRA owners in declining health is that such automatic distributions are often monthly and one or more such distributions will be made after the owner passes and before the custodian is notified of the death. This creates several potential problems and IRA custodians have no uniform approach to it and may just include the post death distributions on the decedent's 1099R.
Even more interesting if the estate beneficiaries differ from the IRA beneficiaries.
To prevent this mess and also relieve beneficiaries from having to complete the owner's year of death RMD, owner's in declining health should just take their RMD early in the year and avoid automatic distributions altogether. If they need more money, they should request distributions as needed. But even this does not eliminate the possibility of passing just before the check is issued or just after the check is issued and before depositing it.
The problem with automatic distributions for IRA owners in declining health is that such automatic distributions are often monthly and one or more such distributions will be made after the owner passes and before the custodian is notified of the death. This creates several potential problems and IRA custodians have no uniform approach to it and may just include the post death distributions on the decedent's 1099R.
Even more interesting if the estate beneficiaries differ from the IRA beneficiaries.
To prevent this mess and also relieve beneficiaries from having to complete the owner's year of death RMD, owner's in declining health should just take their RMD early in the year and avoid automatic distributions altogether. If they need more money, they should request distributions as needed. But even this does not eliminate the possibility of passing just before the check is issued or just after the check is issued and before depositing it.
Statistics: Posted by Alan S. — Thu May 16, 2024 10:42 pm — Replies 3 — Views 289