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Greetings, Bob, and welcome. You asked:

Two sisters and brother are named as beneficiaries on an IRA rollover account. 1/3 each---share and share alike.

Account was for individual over 70 1/2.

Distributions were being taken and recalulated each year in accordance with IRS rules.


1) Can each beneficiary choose a different option for their 1/3?

No, they may not unless "separate accounts" are established for each beneficiary's 1/3 interest by the "applicable date," which is 12/31 of the year following that of the IRA owner's death. When there is more than one beneficiary as of the "applicable date," then the life expectancy of the oldest controls the distribution.

2) Under the recent rule 590 changes regarding life expectancy calculations, (assuming the beneficiaries do not want to liquidate immediately) must the beneficiary continue to use the method established based on the deceased ownerss life expectancy or can they use their life expectancy? Or can they use the oldest of the three beneficiaries?

2a)Do the have the option of just liquidating in entirety by the end of the 5th year?

See the above. The life expectancy of the oldest controls the distribution when the account is not liquidated and there are not "separate accounts." You may always choose to take the proceeds by the end of the fifth year, but you must begin lifetime payments no later than the "applicable date" to preserve that type of distribution. If you want to cash everything out later, you can. You just can't begin lifetime distributions after that date.

3)Can the account be broken up into three separate IRA's or must the account be kept whole?

3a) If the account is broken into 3 IRA's, how should they be titled?

Yes, the IRA may be broken up into three separate accounts, and probably should be so each beneficiary is free to do what that person would like to do. In doing so, the money should be put into an IRA that remains in the name of the deceased. Typically, the title would reflect something to the effect of "John B. Smith, Deceased, FBO Jane S. Doe" to show John is still the original owner, but Mary is the beneficiary. You should ask your IRA provider for help in this regard.

Don't be surprised if you encounter confusion and resistance in accomplishing what you wish done. Just be persistent so all gets accomplished the way you desire no later than Dec 31 of the year following the original IRA owner's death.


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