Follow up on IRA-Beneficiaries

[moemabel]

What is the name of your state?Pennsylvania

Wanted to confirm a few things based on earlier response that if beneficiaries were not named when father's IRA passed to mother as new owner then estate would have to pay estate tax on value prior to distribution:

1) Normally IRA's pass to named beneficiaries out of estate
2) Distribution of the Minimum Required Funds, if to anyone other than spouse will have to be paid in lump sum after 5th year following death unless election to spread distribution over expected lifetime of recipient. QUESTION: On December 31, 2005, (The December after the year of death of the mother
who owned the father's IRA), if the beneficiaries are named by then, do the children get to elect the longer term of distribution?

 

[anteater]

Since distribution rules give me a migraine, I will pass on that.

But I am trying to figure out what you are asking regarding estate/inheritance tax. Even though an IRA with named beneficiaries is not part of the probate estate, it is still part of the taxable estate.

With the federal unlimited marital deduction and the PA inheritance rate of 0% for assets passing to spouses, there probably would have been no tax due when father died and mother inherited the IRA.