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I have a deceased participant, no designated beneficiary, and no spouse/child/parent.  We have been making RMD payments to the Estate for several years, and the participant’s brother is the executor (and plan trustee), so he gets the RMD checks and deposits to an estate account.  I should probably say this is for a qualified retirement plan, not an IRA.

The Plan is now terminating, so the financial advisor is looking to help him roll over the full balance , but is having trouble with what type of rollover account is acceptable (his own firm is questioning).  Most literature indicates that non-spousal beneficiaries may only roll to inherited IRA.  How does one establish an "inherited" IRA when no designated beneficiaries exist in the first place?

Thanks for any input!

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First, I think you should have paid the estate a lump sum, either the year after death or within 5 years after death. The rules should be explicit in the document. Payments to an estate cannot be rolled over. This was a simple situation that someone over complicated.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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7 hours ago, JulesInCNY said:

How does one establish an "inherited" IRA when no designated beneficiaries exist in the first place?

I don't think you can based on IRC §402(c)(11). This defines eligible parties for non spousal inherited IRA's as individuals and trusts.

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Just for completeness, the 5 year rule is only required if the participant died before his or her required beginning date. That can't be determined by the original fact pattern. (Of course, the terms of the plan document control.)

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