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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Estate Law
Satisfied Customers: 116154
Experience:  Experienced in Trust and Succession Law, including Louisiana Laws
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I had been managing an IRA account for my wifes aunt. She

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I had been managing an IRA account for my wife's aunt. She passed away 1 1/2 years ago and her son is the beneficiary of the account. He has been delinquent in arranging for the transfer. Recently he received a check for the RMD that he should have requested, but ignored. Should he only talk with the brokerage firm that has the account or does he need a lawyer to get the transfer done and any taxes due taken care of? I think he owes a 50% penalty on RMD's that were not distributed on time. At some point is there also a penalty based on the total assets in the account as a result of ignoring the account for some time? My Aunt lived in NY and her son lives in CO.
Thank you for your question. I look forward to working with you to provide you th information you are seeking for educational purposes only.

If he is listed as beneficiary on the account, then you need to provide proof of death to the company you have the IRA with and proof of his identity and they will transfer the account over to him and he is going to be liable for any taxes from the time of her death. If he is not willing to take this over and send in the necessary documentation, then you need an attorney to get this transferred into his name and out from under your management and then anything that happens with the account is on him.

The account, since it has a named beneficiary does not need to go through probate, it just requires the beneficiary to send in the proper documentation to the brokerage and they will make the transfer to his name and get him the distributions and he would be liable for penalties if he did not transfer it sooner at her death and did not take the RMD in time.

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Customer: replied 3 years ago.

Other than RMD would any other penalties apply? I heard that after some period of time a tax penalty becomes due as if the entire account was distributed, even though it was not distributed.

Thank you for your reply.

There could be a penalty for failure to transfer or make distribution in 12 months from death, but without being able to examine the accounts there is no way to know exactly and that is something the son will have to actually sit with his local accountant to review based on the son's tax situation as well, since all records need to be examined.
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