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Do you have to inherit an IRA?

Answered by: 

Question: 
Can an IRA be disclaimed?
Answer: 

No. Under IRC Section 2518 and applicable state law, beneficiaries can disclaim their inheritance. Generally, when a beneficiary wants to give up his or her inheritance or portion of the IRA, he or she will have legal counsel draw up an agreement in keeping with state law. This disclaimer will give up the inheritance or take this beneficiary out. The operation of the IRA contract and state inheritance law will determine who the beneficiary will be after the disclaimer. The beneficiary disclaiming the inherited IRA will not be able to say who gets the money in his or her absence. Revenue Ruling 2005-36 – Under § 2518 (b), the term “qualified disclaimer” means an irrevocable and unqualified refusal by a person to accept an interest in property, but only if: (1) the refusal is in writing; (2) the writing is received by the transferor of the interest, his or her legal representative, or the holder of the legal title to the property to which the interest relates, not later than the date that is nine (90 months after the later of: (A) the date on which the transfer creating the interest in the person is made, or (B) the day on which the person attains the age of 21; (3) the person has not accepted the interest or any of its benefits; and (4) as a result of the refusal, the interest passes without any direction on the part of the person making the disclaimer and passes either: (A) to the spouse of the decedent, or (B) to a person other than the person making the disclaimer.

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Learn more about Deborah Crawford’s webinar Inherited IRAs and Death Distributions - Including a deeper dive into the SECURE Act

First published on 06/28/2020

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