Who gets this inherited IRA after the beneficiary dies?

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Q. What happens if a non-spouse beneficiary inherits an IRA account but dies before the money is put in her name. There were no contingent beneficiaries. Which estate would get the IRA?
— Beneficiary, maybe

A. Indeed, this can be complicated.

Generally, IRAs are transferred by a decedent through a beneficiary designation form.

As long as there was a named beneficiary and the named beneficiary survived the owner of the IRA account, the named beneficiary inherits the account, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

“The executor or administrator of the beneficiary’s estate would be entitled to open an inherited IRA for the beneficiary because the beneficiary did not have the opportunity to open it before she passed away,” she said.

But the next issue is who would inherit the account from the named beneficiary because she died before naming her own beneficiary.

“The financial institution’s IRA plan documents would determine the beneficiary when no one is named, generally dictating it go to the spouse or the estate of the deceased beneficiary,” Romania said.

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This story was originally published on June 1, 2021.

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