How Do You Transfer an IRA Into an Inherited IRA Beneficiary Distribution Account?
An IRA allows the owner to name both a primary and a contingent beneficiary. This allows the IRA to avoid probate when the assets are passed on to the next of kin. The Internal Revenue Service (IRS) allows a spouse to assume the IRA or add it to her own. Non-spouse beneficiaries can either take a lump-sum distribution or stretch the IRA with distributions taken based on the beneficiary's life expectancy. The second option helps stretch the income taxes owed on the distributions over a longer period of time, and require a transfer into a beneficiary IRA.
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Instructions
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Meet with the IRA account representative listed on the IRA statement and explain that you are the beneficiary of the account. If the IRA is held via an online custodian, ask for the paperwork required for transferring an IRA into a beneficiary IRA.
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Provide the IRA custodian with the death certificate, allowing you to access all account information and confirm all rightful beneficiaries.
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Open a new beneficiary IRA. This may be done with the existing IRA custodian or through an IRA custodian with whom you are already doing business. Every IRA custodian titles a beneficiary IRA slightly differently, but make sure it contains the following information in some form: "John Doe IRA, deceased 01/01/2010, Janet Doe Beneficiary."
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Fill out and submit a direct rollover form with the IRA custodian where original IRA is held. Fill in the beneficiary IRA account information where the assets should be sent. The money should be sent directly to the new beneficiary IRA custodian within three to six weeks.
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Tips & Warnings
The IRA is still included in the entire estate value for federal estate transfer tax purposes. The beneficiary IRA uses the beneficiary's date of birth to calculate required minimum distributions, thus reducing the amount required to be distributed annually and extending the ability of the IRA to grow.
