Georgia State Law for Successor Beneficiaries on an IRA
An individual retirement account is a financial tool used to defer taxes and save money for retirement. When you set up an IRA account in Georgia you are required to assign beneficiaries, so that upon your death any money left in the IRA passes on to the assigned beneficiaries. In Georgia, unlike other states, the full IRA amount passes to the named beneficiaries, even if the original owner was married, unless no other asset was left for the spouse. In such a case, a required statutory amount is given to the spouse, and the rest is dispersed among the beneficiaries. Upon receiving the IRA, all beneficiaries must pay the required federal and Georgia state income tax that was previously deferred.
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Unmarried
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An unmaried IRA owner in Georgia may name anyone he wishes as the beneficiary to his IRA. The beneficiary of an IRA can be someone who isn't listed as an heir or beneficiary to other assets of the deceased person.
Married
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Georgia is not a community property state, and there is no state law requiring that any portion of the IRA funds to go to the living spouse, providing the spouse receives a 12-month living allowance, either from the IRA or other assets owned by the deceased person. If the spouse is designated as a beneficiary, or given the funds automatically when there are no other beneficiaries, she may choose to roll the IRA into her own IRA, thereby avoiding the need to pay taxes on it for that year.
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No Beneficiary
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If the beneficiaries listed on the IRA are also deceased, and there are no newly named beneficiaries, the IRA proceeds are payable to the deceased person's estate and divided equally between the heirs. If at the time of death there are no children, then the proceeds go to the spouse. For those who have neither a spouse nor children, the proceeds are distributed among the surviving parents or siblings. Receiving the IRA funds in this way may imply paying higher taxes.
Taxes
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Some inherited assets, such as bank accounts, stocks, and real estate, pass to beneficiaries without income tax being due. IRAs, with the exception of a Roth IRA, are required to deduct the income tax due when the IRA is distributed to the beneficiary. According to IRS publication 590, the federal tax amount is the same that would be taxed to the deceased if he were to receive distribution. Besides this federal taxation, Georgia withholds a mandatory 6 percent of gross distribution.
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