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Long story short: My wife's dad died at 90, leaving behind three daughters and a fourth wife. The Estate was totally screwed up, and family agreed to an outcome that was approved by the court, so it's all legit. Part of the settlement involved fourth wife getting the RMDs during her life, with the beneficiaries to her inherited IRA being the three daughters. The IRA was transferred to the fourth wife as an inherited IRA, with the daughters being named beneficiaries. My question is what happens when the fourth wife dies. Does each daughter get one-third as a rollover inherited IRA, subject to RMDs of I guess the dead dad or the dead fourth wife, or will the IRA be dissolved and taxes paid, with the after-tax balance being distributed (or taxes paid by each daughter)? Thanks.
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Here is a link to Fidelity that explains all the options. Unfortunately, it I don't see anything specific to your question, i.e., inheriting and inherited IRA. I'm guessing it wouldn't be any different than being the first person to inherit the IRA except that your with draw rate would be different.

It might quickly be a moot point, according to the life expectancy tables she will be forced to with draw 10%, so chances are you're taking out capital and draining the the IRA.

JLC

https://www.fidelity.com/retirement-planning/learn-about-ira...
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Long story short: My wife's dad died at 90, leaving behind three daughters and a fourth wife. The Estate was totally screwed up, and family agreed to an outcome that was approved by the court, so it's all legit. Part of the settlement involved fourth wife getting the RMDs during her life, with the beneficiaries to her inherited IRA being the three daughters. The IRA was transferred to the fourth wife as an inherited IRA, with the daughters being named beneficiaries. My question is what happens when the fourth wife dies. Does each daughter get one-third as a rollover inherited IRA, subject to RMDs of I guess the dead dad or the dead fourth wife, or will the IRA be dissolved and taxes paid, with the after-tax balance being distributed (or taxes paid by each daughter)? Thanks.

I can't find a citation and I'm working solely from memory (which may be faulty), but I believe that the beneficiary of an IRA that is already titled as a beneficiary account cannot use the life expectancy tables to calculate RMDs. The account must be liquidated within 5 years.

Ira
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The Estate was totally screwed up, and family agreed to an outcome that was approved by the court, so it's all legit.

That's lovely, but as I had to tell more than one first, a/k/a ex, wife in my IRS years, the government wasn't a party to that agreement and isn't bound by it. Disposition of IRAs is first determined by the stated beneficiary. Do you have any idea of who that was?

My recollection is the same as Ira's, but first we need to know exactly how the IRA got into the widow's name. It couldn't be through the probating of the estate.

Phil
Rule Your Retirement Home Fool
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My recollection is the same as Ira's, but first we need to know exactly how the IRA got into the widow's name. It couldn't be through the probating of the estate.

what happens to an IRA if there's no named beneficiary ?
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what happens to an IRA if there's no named beneficiary ?

It goes to the estate of the owner, and then to whomever is specified in the will.

The downside is that it is no longer an inherited IRA and must be withdrawn in full within 5 years.

--Peter
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That's lovely, but as I had to tell more than one first, a/k/a ex, wife in my IRS years, the government wasn't a party to that agreement and isn't bound by it. Disposition of IRAs is first determined by the stated beneficiary. Do you have any idea of who that was?

Oh, wow, this is getting more complex. Ok, what happened was my wife's dad changed his Will about 6 months before he died, but his Estate attorney didn't get him to change the IRA beneficiary designations. The change in the Will gave the fourth wife about half of his IRA (yes, I know there's something wrong with this, but my wife and her two sisters didn't want to fight it). She was to get his RMDs for life, with whatever is left going to my wife and one of her two sisters. The unchaged IRA designations gave the IRA in equal portions to each of his three daughters, one of whom is my wife. The new Will also gave one of the daughters the other half, cutting out my wife and her other sister (this was done by the remaining sister to screw her other two sisters, but again my wife and her other sister didn't want to do anything about it). Northern Trust held the IRA, and it refused to do anything without a court order, so everyone got together and the Estate attorney got a court order that allowed Northern Trust to change the beneficiary designation to only cover the fourth wife and the one sister, with my wife and her other sister getting whatever's left at the deaths of the fourth wife and the screwed up sister. Bottom line: There's an inherited IRA for the fourth wife, plus another inherited IRA for the screwed up sister, both IRAs name my wife and her other sister as sole beneficiaries. There are many reasons why all this happened that I see no reason to go into, plus I stayed out of it completely in order to keep my wife happy. I don't care about the money at all, and truth be known neither does my wife. Anyway, Northern Trust sends my wife a yearly statement regarding the fourth wife's inherited IRA. We don't know what happened to the screwed up sister's half, and we don't care. There's a good chance that the screwed up sister has cashed it out completely, and the screwed up sister doesn't communicate with the other two sisters, and they don't communicate with her. Anyway, when I was looking last night at how much Northern Trust was screwing the IRA up (the fourth wife's one) with rediculous investments for an old lady, plus the rather large fees, I wondered what would happen when the old bird dies off, which is why I originally asked this question. This is probably more than anyone wants to know about this, and it's a lot more than I care to even think about all that has happened in this truly screwed up family mess. Anyway, thanks for any imput.
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There are many reasons why all this happened that I see no reason to go into, plus I stayed out of it completely in order to keep my wife happy.

Usually the best course. I'm aware of, but not familiar with, a process through which IRA beneficiaries can "disclaim" their interests, so maybe that's what they cooked up. So now we're back to your wife as a beneficiary of an inherited IRA, and as I said before, my recollection on what happens after the widder dies is full distribution within 5 years.

Phil
Rule Your Retirement Home Fool
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Usually the best course. I'm aware of, but not familiar with, a process through which IRA beneficiaries can "disclaim" their interests, so maybe that's what they cooked up. So now we're back to your wife as a beneficiary of an inherited IRA, and as I said before, my recollection on what happens after the widder dies is full distribution within 5 years.

Thanks, and thanks.
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what happens to an IRA if there's no named beneficiary ?

It goes to the estate of the owner, and then to whomever is specified in the will.

The downside is that it is no longer an inherited IRA and must be withdrawn in full within 5 years.



thx
.... would that make it taxed as ordinary income
instead of 'estate' taxed?
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would that make it taxed as ordinary income
instead of 'estate' taxed?


I'm not sure what the question is. The values of IRAs are included in the gross estate calculation and, depending on the total value of the estate, may increase the amount of estate tax due from the estate. IRA distributions result in ordinary income to the recipient. If that recipient is the estate the estate may pay the income tax or may pass the taxable income through to the beneficiaries of the estate.

Phil
Rule Your Retirement Home Fool
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m not sure what the question is. The values of IRAs are included in the gross estate calculation and, depending on the total value of the estate, may increase the amount of estate tax due from the estate. IRA distributions result in ordinary income to the recipient. If that recipient is the estate the estate may pay the income tax or may pass the taxable income through to the beneficiaries of the estate.



thanks
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