In Private Letter Ruling 201909003, the Internal Revenue Service ruled that an IRA payable to an estate could be transferred to an inherited IRA for the benefit of the estate’s beneficiaries. In the IRS ruling, the decedent received RMD’s from the IRA during the year of their death and named the estate as the sole beneficiary. In the decedent’s will, the decedent named their entire estate to certain beneficiaries.
The division of the IRA (of the decedent) into inherited IRA’s for the beneficiaries was not considered a taxable event. Per the ruling, the beneficiaries can take RMD’s for each of the inherited IRA’s for the remaining years of the life expectancy of the decedent and each beneficiary is then responsible for any tax liability related to the RMD’s from their inherited IRA’s.
Please note that this ruling applied to the facts of a certain case that was submitted and could have been avoided with proper planning on the front end. Interested in learning more? Contact the experienced attorneys of Morris Law Group.