Virginia Beach, VA asked in Estate Planning for Maryland

Q: Options for transferring retirement accounts to heirs?

There are no designated beneficiaries on the accounts.

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2 Lawyer Answers
Cedulie Renee Laumann
Cedulie Renee Laumann
Answered
  • Estate Planning Lawyer
  • Crownsville, MD
  • Licensed in Maryland

A: If a retirement account has no beneficiaries, it usually defaults to the estate of the deceased. An estate attorney can help navigate the process of estate administration and you're encouraged to seek legal advice if you are the personal representative listed in the Will (or family member of someone who died without a will).

If you asking just as a planning matter (and not because someone has died with an account that has no beneficiaries), options include naming beneficiaries to receive directly or setting up a basic revocable trust and having the trust as the beneficiary (with the trust administering the assets).

While not legal advice, I hope the above answers your general question.

Nina Whitehurst agrees with this answer

Mark Oakley
Mark Oakley
Answered
  • Estate Planning Lawyer
  • Rockville, MD
  • Licensed in Maryland

A: If the account holder is deceased, and you are the personal representative handling the estate, then it is possible, and in most cases advisable, to do a direct transfer of the retirement accounts into the names of the individual heirs who would have received the account funds had they been liquidated and deposited into the estate account. In doing so, you maintain the accounts as retirement accounts, now held in the name of each heir, and there is no early withdrawal penalties, tax consequences, etc., and the heirs can maximize how they want to handle distributions as well as preserve the deferred tax treatment for as long as the law allows. The IRS Code was amended some years ago to allow this. The beneficiaries will need to be qualifying (lineal descendants, surviving spouse, etc.). Consult a tax accountant regarding the specifics, and perhaps consult a lawyer to review the will to confirm how the estate is to be distributed so as to verify this strategy is appropriate.

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