"Barry Picker" <bpickercpa[at]mindspring.com> wrote in

- quote -

OK then. Glad I haven't lost my mind.

Now the NEXT question.. (grins)

Since the IRA is a contract, then _IF_ the custodian of the
account is willing to modify the contract per the new
owner's (beneficiary) instructions, why couldn't the account
be paid out over the life of the recipient instead of having
a rapid forced distribution?

It seems like it would be in both the custodian's and the
recipient's interest to do so if they can possibly do.

Regards,
Eric

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- quote -

You are correct that the terms of the IRA agreement will
definitely control. For example, if the terms of the
agreement said that in the absence of a beneficiary
designation form on file, the beneficiary will be the
spouse, and if no spouse then the children, that a spouse or
children would be considered the designated beneficiary even
if there was no beneficiary designation form on file.

Some custodians actually have these types of provision in
their agreement; most do not, and so the default becomes the
estate. That's why, as was pointed out in the original post
on this thread, people should confirm that the custodian has
a beneficiary designation form on file. You wouldn't
believe how many get lost.

Barry Picker, CPA/PFS, CFP

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- quote -

Thanks for the correction supplied by superior knowledge.
(grins)

Regards
Eric

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smithff33[at]aol.com (Herb Smith) wrote in
- quote -

Wouldn't the terms of the contract between the deceased
owner and the custodian rule here?

Or when there is no beneficiary listed, do the laws
regarding probate and estates override any contrary
contractual agreements? (Assuming theoretically that there
may be some.)

The terms of this specific contract between the deceased
individual and the custodian probably do exactly call for an
'unbeneficiaried' account to pass to the estate, so I might
be just wasting bandwidth by objecting, but it was my
understanding that recipient IRAs were not part of the
estate unless so designated on the beneficiary line.

Regards,
Eric

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- quote -

The information on the above post is incorrect for the
specific fact pattern mentioned in the original post. The
beneficiaries CANNOT use their own life expectancies; they
MUST use the five year rule.

The answer would be different if the facts were different.

Barry Picker, CPA/PFS, CFP

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"Andrew Bell" <acbell[at]iastate.edu> wrote:

- quote -

Without a named beneficiary, the IRA becomes an asset of the
probate (and total) estate. Distributions are made according
to the will. If no will, then distributions are made
according to the intestacy laws in her state.

- quote -

The IRA has to be distributed no later than the end of the
fifth year after death, but can be earlier. There do not
have to be annual distributions. There is no provision for
extending the payments.

- quote -

No.

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"Andrew Bell" <acbell[at]iastate.edu> wrote in news:vsiod690vjsq07

- quote -

First, I'm neither Accountant nor Attorney.. But I have read
a bit about IRA's. Of course, I might have misread so,
caveat emptor.

The IRA is basically a contract between the company that
administers it and the individual that made it. It's not
(necessarily?) part of the estate. A lot will depend on how
the wording on the contract reads.

But a deceased owner's IRA _is_ allowed to pay out over the
actuarial life of the beneficiary instead of being forced
out after 5 years, or 1 year or whatever. The company can
split her account into 5 new ones. Rollovers into existing
accounts or further contributions to these are NOT
permitted.

What I'm not sure of is, absent specific provisions to the
effect in that contract, whether you can force the company
to 1.) split the account into 5 heirs and then 2.) actually
pay it out over their life times.

You might try reading PUB 590 yourself to see what the law
allows, then contact your company to see what they think
they have to do.

Ymmv on reading regs for yourself, but finding a lawyer who
understands the particulars of this stuff has been
problematic for me.

Regards,
Eric

(maybe this post will stimulate someone else with better
info to correct what I've written.)

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My mother-in-law died with a regular IRA with no named
beneficiary. She had not reached the age of mandatory
distribution at the time or her death. She had five
children who share equally in the assets of the estate.

Does the estate inherit the IRA? If so, do the assets
become part of the probate estate?

Does one have five years to take distribution from the IRA?
Is there any reason why the distribution might have to be
sooner or could be prolonged?

Can any of the funds in the IRA be rolled over into an IRA
owned by the children?

Thanks,

-- Andrew Bell
acbell[at]iastate.edu

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