Loans and death

[Guest jetfaninmn]

A particpant has died and named his two daughters beneficiaries - no spouse.

One daughter is 21, the other turns 18 this month.

There is an outstanding loan in the amount of $1,200.

How is this handled:

a. In regards to a minor as a beneficiary at the time of death

b. In regards to the outstanding loan

Thanks!

[Guest mjb]

Need to check state law b/c in most states 18 is age of majority to own property or open an inherited IRA in 2007. Loan balance is deemed imputed income to participants's estate. Benes receive account balance as taxble distribution which can be tranferred to inherited IRA.

[Guest jetfaninmn]

So is a 1099-R issued for the loan in the name of the deceased? How is that handled? 1st time this has happened for me.

[JanetM]

Yes, 1099R issued to deceased and included in final years income tax return.