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New Beneficiary Names Due to Death

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Question: 
Best practice for closing and reopening IRA and or ​CD accounts in new beneficiary names due to death. Should we keep the same rate or give the current rate which is less?
Answer: 

No best practices, just opinions. I suggest you give the beneficiary the rate the decedent had, but only for the remaining term. First, because it's the polite thing to do. Second, because beneficiaries sometimes delay taking control of the funds because they are going to suffer a reduction in rates. The complexity of the situation can increase exponentially if the beneficiary dies in the interim; i.e. it was a bad decision on their part, but you will end up dealing with the results.

In a situation where the decedent's IRA held multiple time deposits with varying rates and terms, I suggest you offer a composite rate and term and consolidate them into a single investment.

First published on 09/30/2018

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