When someone dies, transferring the assets of the deceased can be complicated as you must follow strict legal guidelines. In the case of an Individual Retirement Account, the process is greatly simplified because each IRA must have one or more of its own beneficiaries. Rather than passing through probate or following the instructions of a document such as a living trust, an IRA passes directly to the beneficiaries specified by the account owner at the time the account is opened.
Locate the estate administrator or executor. Unless you are authorized to act on behalf of the deceased, either by court order or by legal documentation drafted by the decedent, you cannot transfer the IRA of a deceased person. If you believe you are the authorized agent of the estate, then you must locate and possess the authorizing documentation.
Contact the IRA custodian. All IRAs have custodians, which are usually financial services firms that oversee the administration of the account. Inform the agent in charge that the account holder has died and that you will be in charge of distributing the IRA.
Provide the custodian with authorizing documentation. The IRA custodian will need a copy of your written authorization to act on behalf of the deceased account holder. This generally consists of a copy of the death certificate and the living trust or court order that names you as executor or administrator.
Request the beneficiary information sheet. When the account holder opened the IRA, he should have provided identifying information on his beneficiary. Depending on the age of the account and the thoroughness of the IRA custodian, the information you find may range from a simple name to the address, date of birth and Social Security number of the beneficiary.
Contact the beneficiary. Inform him of the distribution options for the deceased person's IRA. Generally, you can either pay out a cash distribution or rollover the IRA into a beneficiary IRA. If the beneficiary is the spouse of the deceased person, the surviving spouse can treat the IRA as her own per IRS rules.
Distribute the IRA. Instruct the IRA custodian to distribute the deceased person's IRA according to the wishes of the beneficiary.
Tips
IRS Publication 590 outlines the rules for taking required distributions from beneficiary IRAs, as well as the benefits of the spousal IRA. A beneficiary can disclaim the inherited IRA if she does not wish to receive it.
References
Tips
- IRS Publication 590 outlines the rules for taking required distributions from beneficiary IRAs, as well as the benefits of the spousal IRA.
- A beneficiary can disclaim the inherited IRA if she does not wish to receive it.
Writer Bio
John Csiszar earned a Certified Financial Planner designation and served for 18 years as an investment counselor before becoming a writing and editing contractor for various private clients. In addition to writing thousands of articles for various online publications, he has published five educational books for young adults.