FINRA (the Financial Industry Regulatory Authority) released an Investor Alert early this year advising IRA beneficiaries to review inherited IRA tax implications with the Internal Revenue Service (IRS). Several of the issues addressed in the alert include confusion over administration of Required Minimum Distributions (RMDs) and IRA spousal rollovers.
The timing and amount of RMDs depend upon multiple factors, including the retirement account balance, the beneficiary’s age, the age of the decedent (account owner) upon death, and more. IRA custodians have no responsibility to notify beneficiaries about the proper timing and amounts of RMDs, which means beneficiaries must do their due diligence in seeking appropriate tax advisement. Failing to do so could result in excessive penalties. Our tax attorneys explain what to do after a missed RMD.
If the beneficiary was the spouse of the IRA owner, the surviving spouse has the right to elect a spousal rollover. When properly managed, an IRA spousal rollover allows the surviving spouse to treat the inherited account as their own. However, the spouse has other options, including treating the IRA as an inherited account. Learn more about a spouse’s IRA distribution advantages.
Inheriting an IRA through North Carolina probate, the process required when beneficiary designations were incomplete or the named beneficiary predeceased the account owner, is a lengthy process. Assets will be divided and transferred to next of kin, which may include individuals that the account owner did not intend to receive the assets.
Executors inventorying and overseeing the transfer of retirement funds that are part of the probate process may have questions. Contact a North Carolina estate lawyer to review the decedent’s assets and options.