News
Disclaimer · Estate Planning · Inherited IRA · IRS Rules
The article, published on February 26, 2018, by jblankenship on financialducksinarow.com, details the IRS rules for disclaiming an inherited IRA, specifically clarifying that Required Minimum Distributions (RMDs) taken in the year of death do not disqualify a primary beneficiary from disclaiming all or a portion of the account.
The article explains that beneficiaries disclaim an inherited IRA to manage estate assets, equalize distributions among heirs, or for tax planning. Internal Revenue Code §2518 generally requires a written disclaimer within nine months of the original account owner's death, provided the beneficiary has not received a benefit.
A critical clarification from Revenue Ruling 2005-36 ensures that RMDs for the year of death, if taken by the primary beneficiary, do not count as a disqualifying benefit, preserving the option to disclaim. This ruling also permits partial disclaimers, either as a specific (pecuniary) dollar amount or a percentage of the account as of the date of death, with any attributable income also disclaimed.
If a partial disclaimer occurs after an RMD, the RMD is allocated to the primary beneficiary’s non-disclaimed portion. The author, jblankenship, emphasizes the complexity and advises consulting an estate attorney for specific state laws and beneficiary designations like "per stirpes."
