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My husband inherited a non-spouse IRA in the amount of

550,000 from his sister. He...
My husband inherited a non-spouse IRA in the amount of 550,000 from his sister. He is the sole beneficiary and her four adult children are the contingents. If he disclaims a portion of this IRA, will it be evenly divided amongst the contingent and also how will my husband and I be impacted by this disclaimer?
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Answered in 8 minutes by:
3/16/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,739
Experience: Taxes, Immigration, Labor Relations
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If your husband disclaim inheritance - neither you nor he will be impacted.

You will simply refuse benefits on behalf of other beneficiaries.

Now - we need to verify - if contingent beneficiaries are named on that IRA account ?
If yes - and if they are named as equal beneficiaries (most likely) - assets will be divided equally unless some of beneficiaries will decide to disclaim.

If however contingent beneficiaries are named on the will and not ion the account - the will will be probated - and only after the probate completed - normally in 6 months - assets will be divided.

Let me know if you need any clarification or help with reporting?

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Customer reply replied 1 month ago
Will we be negatively affected if he disclaim part of the IRA? And yes the children are named. There is no will.

I do not see any negative effect besides that you will not receive the money and will not have any control how they will be distributed or used.

You are perfectly file to disclaim inheritance and are not required to accept it.

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Customer reply replied 1 month ago
There is no penalty to us for keeping a portion?

"keeping a portion" will contradict with your intention to disclaim inheritance...

You will not be able to disclaim a part of inheritance...

That is a choice you will need to make...

While you may regret later - that may not be rolled back after you disclaim inheritance.

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Customer reply replied 1 month ago
Is that true even for an non-spouse IRA? We have been led to believe that disclaiming a portion means we will give up rights to that amount but we are free to make withdrawls from the portion that we kept and it would be subject to taxes as part of our income and we would have to make the required withdrawl next year by December. Is this information false?

That is correct for any inherited assets - not only for inherited IRAs - if you choose to disclaim the inheritance to which you are entitled - you are looking all rights to these assets.

You may not disclaim a part of inheritance.

You will not be able to request distribution unless you accept the inherited asset.

If there were several IRA accounts - and you are named as a beneficiary for all on them - you may choose to accept some and disclaim others.

But if that is only ONE account - you need to make a choice.

RMD - required minimum distribution - is a separate issue - not directly related to who will inherit the IRA.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,739
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 1 month ago
Thank you.
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