IRA Designated Beneficiaries
A designated beneficiary is an individual entitled to a portion of an IRA owner's account, contingent on the owner's death or another specified event (such as a disclaimer).
The fact that an individual’s IRA passes to another individual under state intestacy law does not make that individual a designated beneficiary(intestacy=death without a will).
Only humans may be designated beneficiaries for purposes of calculating required distributions.
If a non-person is named as a primary beneficiary of an individual retirement account, even if a human is also a primary beneficiary, the retiremeent account is treated as having no designated beneficiary. This problem can be corrected by distributing the non-person’s funds by September 30 of the year after the owner’s death or by establishing separate accounts by December 31 of the year after the owner’s death.
The designated beneficiary is determined at September 30 of the year after death of the accountholder.
A designated beneficiary who dies after the owner, but before September 30 of the year after death, is assumed to be a designated beneficiary at the September 30 designation date. The only benefit of this rule is that it may allow an estate to elect lifetime distributions.
Any beneficiary eliminated by distribution of the account, through a disclaimer, or for any other reason, by September 30 of the year after death, is disregarded in determining the designated beneficiary for purposes of calculating required distributions.
Multiple Designated Beneficiaries
If, at December 31 of the year after the accountholder's death, the individual retirement account has more than one designated beneficiary and the account has not been divided into separate accounts for each beneficiary, the oldest beneficiary is the designated beneficiary for purposes of calculating lifetime distributions.
If an IRA has been divided into separate accounts by December 31 of the year after death, each beneficiary’s age is used in calculating lifetime distributions.
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