Where can I find information on how to distribute my deceased parent's assets?

By Denise Appleby AAA
A:

Related information can be found in IRS publication 590. See page 32 (bottom right hand corner) and page 35.
If the trust is qualified, as described on page 35, distributions may occur over the life expectancy of the oldest beneficiary under the trust.

If the trust is not qualified, then the following applies:

  1. If the IRA owner dies before the required beginning date, the assets must be distributed by December 31 of the fifth year following the year the IRA owner died.
  2. If the IRA owner dies on or after the required beginning date, the assets must be distributed over the remaining life expectancy of the decedent.

The assets can't be rolled to a retirement account, but they can be transferred to an inherited IRA. When speaking with the financial institution, be sure to use the right terminology, as use of the wrong terminology could result in transactions that you do not want. When moving the assets to an inherited IRA, please check to make sure that any document you sign is not a distribution request, but a transfer request. If you sign a distribution request and the assets are distributed from the IRA, the amount will not be eligible to be rolled to an IRA and will be treated as ordinary income.

Please discuss the matter with the financial institution and a competent tax professional to ensure that all the necessary steps are taken to ensure compliance, as well as to ensure that you make the most financially suitable choices.

For more information about inherited IRA assets, check out Inherited Retirement Plan Assets – Part 1, Inherited Retirement Plan Assets – Part 2, The Importance Of Sept. 30 For Multiple Beneficiaries.

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS

  1. What's the difference between a financial advisor and a financial planner?

    Seeking professional advice from a financial advisor may involve asking for financial help from a certified financial planner, ...
  2. What effect will a prenuptial agreement have on a 401(k)?

    Courts have ruled that a prenuptial agreement for qualified plan (including 401(k)) assets is invalid. The logic is that ...
  3. What is a good book on creating a trust that would qualify as the beneficiary for ...

    "Life And Death Planning For Retirement Benefits" has all you need and more. If you read this book, you won't need any luck.To ...
  4. Can 529 plans be used to transfer wealth to other family members if the original ...

    Yes, the 529 plan (also known as a "qualified tuition program") allows you to distribute and roll over funds from one 529 ...
RELATED TERMS
  1. Laughing Heir

    A distant relative who has inheritance rights despite not having ...
  2. Ultimogeniture

    A system of inheritance whereby the youngest son gains possession ...
  3. Crummey Trust

    An estate planning technique that can be employed to take advantage ...
  4. Gift Letter

    Written correspondence to a lender stating that money received ...
  5. Beneficial Interest

    The right to receive benefits on assets held by another party. ...
  6. Dynasty Trust

    Long-term trusts created to pass wealth from generation to generation ...

You May Also Like

Related Articles
  1. A new Supreme Court ruling has some financial advisors rushing to set up trusts to help protect inherited IRAs. Is that necessary?
    Investing Basics

    How Advisors Can Protect Inherited IRAs

  2. Personal Finance

    Top 10 Money Mistakes New Parents Make

  3. Home & Auto

    Why Your Will Should Name Designated ...

  4. Retirement

    Should You Convert Your IRA?

  5. Taxes

    10 Sources Of Nontaxable Income

Trading Center