Tax and Money Tip this Week:
Inheriting an IRA: Ignoring Non-Person Beneficiaries
May 4, 2016 | No. 283
IRA’s with multiple beneficiaries that include charity or other non-person entity must pay out that entity’s share by September 30 of the year following the owner’s death. If that share isn’t paid out and the account hasn’t been split, the rest of the beneficiaries can’t take withdrawals over their life expectancies. They will have to empty the account within five years if the owner died before his required beginning date for taking distributions. If the owner died after that date, the beneficiaries must take annual RMDs based on the deceased’s life expectancy, as noted in IRS tables.
If a trust is a beneficiary, send a copy of the trust to the IRA custodian by October 31 of the year following the year the owner dies. Otherwise, the trust is considered a non- designated beneficiary and the same pay-out rules that applied in the previous scenario with the charity will kick in.
Source: Kiplinger’s Retirement Report
Mark Vitek, CPA/PFS, CFP®
…until next week.