Multple Beneficiaries on IRA

In the event of the death of an IRA holder with 50/50 beneficiaries who chose not to set up separate accounts, how should we change the legal title? Both as Beneficiary of "Deceased" IRA? Or just the one whose tax id# we are using? The deceased IRA holder is in RMD and withdrawals will need to be reported for tax purpose. Or should we encourage them to set up separate accounts??

You can always consult legal counsel for advise as to the best approach. I would say reach out to the other beneficiary for their tax ID number.

No, you should require them to set up separate accounts.

Any distributions you make will have to be made in the name/TIN of the person who makes the withdrawal. If they do not withdraw the same amount each time, you will need to keep track of how much each person owns. (I've never seen a system that can do either of those things.)

They do not own the funds jointly, they own them individually. If one of them dies, there will be no right of survivorship and who owns the decedent's half will be determined by his will or Oklahoma's laws on intestate succession. They will undoubtedly want their money.

If that does not sound like a mess, I've done a poor job of explaining it.

Ok I have another scenario. I may be making too much of this but just want to make sure I am not missing anything.
We have an IRA holder, Mary Jane,who was in RMD and passed away. Her husband Buddy, who was primary beneficiary, did not chose to treat IRA as his own. The legal on the IRA was changed to Buddy as beneficiary of Mary Jane IRA, and RMDs were continued. Buddy passed away. Son and daughter were contingent beneficiaries on the mothers IRA when it was set up. So there is no problem with doing separate accounts for the son and daughter. ??

IMO - Once Mary Jane's IRA was changed to Buddy as beneficiary, Buddy should have set up his own beneficiaries. In the absence of him doing that it would probably go to his estate. I would consult my legal counsel about that one.

That is the correct answer.

I'm pretty certain the OBA offers IRA training that would address these issues. As they have both ownership and income tax implications for the bank's customers, knowing the correct answers is pretty important and necessitates your bank having fully trained personnel..

Ok I understand. We were thinking because Buddy had an IRA in his name and he had his children named as beneficiary (same as the mother) that we would be ok assuming they would still be beneficiary of the mother's IRA after Buddy passed away.

No. At the time of his death it was not her IRA anymore. It was his.

Ok that makes sense. Thank you!

And the questions go on.....What is the proper way to handle the transferring of the money to each beneficiary? Is this considered a "new account" with all the paperwork of a new IRA? Or can we just do the entries to transfer it from the deceased to the beneficiary IRA?? Hope that makes sense.

The IRS does not require this mechanism, but it allows the most flexibility among the beneficiaries and all required information reporting will be generated automatically.

Set up a "payout" account in the name of each beneficiary; e.g. Jane Smith, beneficiary John Smith IRA. (The wording is not negotiable.) The payout account will use the beneficiary's address and SSN. Each beneficiary has a right to name their own beneficiary on their payout account, but need not execute an IRA agreement. (Jane is not opening an IRA, she is taking a payout from John's IRA.)

1)Transfer the appropriate pro rata portion from John's IRA to that of each beneficiary; e.g. if there were 4 beneficiaries, transfer 1/4 of the amount from the decedent's IRA to Jane's payout account. This is an "internal" transfer, it is not a reportable transaction.

2) Let each beneficiary chose the payout option they wish for his or her account; e.g. they can take it all in a heated rush, spread it over their life expectancy, etc. There are some requirements. (This account is not eligible to receive contributions; it's sole purpose is to facilitate the proper distribution and reporting of the amounts involved.) Your forms vendor would appreciate it if you required each beneficiary to sign a form indicating their distribution and withholding preferences, but it may or may not be necessary. (Generally, this only needs to be done once.)

3) All distributions from the beneficiaries' payout accounts are reportable with a distribution code of "4," i.e. a distribution due to death.

These are not "Oklahoma" specific questions and might have a better chance of being noticed in the "general" forums; e.g. Operations.