Overview common questions about beneficiaries and IRAs.
Beneficiary Concierge
For questions regarding tax implications or advice on what makes sense for your circumstances, connect with your tax, legal, or financial professional. For information regarding a STRATA IRA account or to make a beneficiary claim, reach out to STRATA's Beneficiary Concierge team at 866-891-8264. Our team will assign a dedicated representative to work with you from your initial claim until the account is settled.
Explore STRATA's comprehensive FAQs below—discover best practices and access additional resources to help ensure that the wishes of the IRA owner are seamlessly fulfilled by everyone involved.
Claim Process
1. Q: What documents are needed to submit a beneficiary claim?
A: Depending on the beneficiary designation and account type, documents will vary. STRATA's Distribution Options: IRA Guidelines (linked below) provide an overview of what to expect along with definitions of key terms.
An executor, last will and testament, or divorce cannot overturn a beneficiary designation unless ordered by a court. In such a case, the court order must be submitted for STRATA to review.
2. Q: What is needed if I am a beneficiary and I am a non-U.S. citizen?
A: In addition to the required documents listed on STRATA's Distribution Options: IRA Guidelines, a non-U.S. citizen must also provide IRS Form W-8BEN and a U.S. or foreign tax identification number.
3. Q: What are my options for receiving the inheritance of the IRA?
A: All beneficiaries have the option to either take a distribution or disclaim the inheritance of an IRA. The distribution options depend on the beneficiary designation (refer to STRATA's Distribution Options: IRA Guidelines).
If a beneficiary chooses to disclaim an IRA inheritance it must be in writing, including the name of the disclaimed assets, and be initiated within 9 months of the date of death (additional state specific guidelines may apply). Once disclaimed, IRS rules require that the beneficiary cannot receive any benefits of inheritance either directly or indirectly.
4. Q: What if there are multiple beneficiaries and the IRA assets are illiquid or non-divisible?
A: Multiple beneficiaries can expect extended times to settle assets within an account if they are precious metals, real estate, or certain types of private and public investments. The distribution process becomes more complex when there is more than one beneficiary and the asset divisions are not clearly laid out, illiquid, non-divisible, and/or include multiple percentage amount assignments.
Beneficiaries will not have immediate access to funds—funds should not be counted on to manage immediate expenses. In order to settle the account per the IRA owner's wishes:
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- Liquidation may be needed in order to make funds available. Assets may take time to sell, and the distribution can only be completed once funds are available.
- For multiple beneficiaries that are wanting to claim non-divisible assets, such as a unique piece of property or specific precious metals, challenges may arise. The assets still must be divided according to the designation terms, and other adjustments may be needed in order to fulfill the terms of the beneficiary designation.
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5. Q: Can a beneficiary access the decedent's online STRATA IRA account?
A: No, a beneficiary is not granted access to the decedent's online account. The assets are either distributed or rolled over to a new inherited IRA account in the beneficiary's name. Once the inherited IRA account is opened, the beneficiary will be the new owner and will have their own online access.
Distributions
6. Q: Do beneficiaries pay taxes on inherited IRAs?
A: Taxes depend on the type of IRA account. For beneficiaries that inherit a Roth IRA, contributions are taxed, therefore distributions are tax-free. For those that inherit a Traditional IRA, contributions are not taxed and any amount distributed is considered a taxable event according to the IRS. Beneficiaries must include any taxable distributions they receive in their gross income.
7. Q: Is a beneficiary required to take an RMD?
A: Yes, a beneficiary who inherits an IRA account is subject to required minimum distribution (RMD) rules. Spousal beneficiaries who inherit an IRA have more flexibility than non-spouse beneficiaries and several factors determine if an RMD is applicable to the inherited IRA:
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- Did the account owner pass after 2019?
- What is the beneficiary's relationship to the decedent?
- Did the decedent pass before or after their RMD date?
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IRA custodians and trustees are not required to notify beneficiaries of RMD requirements. It is up to the beneficiary to calculate and complete RMD requirements. Consult a tax, legal, or other financial professional to better understand RMD requirements as they relate to your specific scenario. STRATA's RMD calculator can also help calculate anticipated RMD amounts.
8. Q: Are the fees that apply different with a beneficiary?
A: STRATA fees are the same for accountholders and beneficiaries. Refer to the STRATA's IRA Fee Schedule for a full list of account, processing, and transaction fees that may apply.
Quick Reference Guide
Several resources are available for beneficiaries including our Beneficiary Concierge team, IRS.gov, and STRATA's Distribution Options: IRA Guidelines.
