January 2025
Q-1. I have a question regarding one of our Roth IRA beneficiaries. Owner died, had son and daughter listed as 50/50 beneficiaries. We did not have enough information listed for the son... such as no social security number. Apparently he is estranged from the family and we are having a really hard time contacting him. What should/can we do if we don’t have his social security number by year end? We are trying to get the owner’s IRA closed of course and split 50/50 to beneficiary Roth IRAs, but are facing this dilemma.
A-1. Current laws and rules do not address this situation very well.
The unclaimed property rules do not yet apply. It is unclear when they would apply in this situation since no distribution is required for 10 years.
The CIP rules apply to a beneficiary only after the Roth IRA owner has died. Within a certain amount of time you must pay out the inherited Roth IRA funds, but you do not have the needed information.
Certainly this situation has arisen at other banks, what guidance have the regulators provided, if any?
The bank will want to set up two inherited Roth IRAs even though you don’t have his social security number or his other information.
Might it be possible that even though the family relationship may be difficult that a family member would help you.
As long as the funds remain in the Roth IRA the income earned will be tax-free for 10 years.
A Form 5498 must be prepared for each Roth IRA beneficiary by 5/31/2025 so there is some time.
Technically, the bank is to furnish a FMV statement to each beneficiary by 1/31/2025.
Being a Roth IRA there is no RMD for 2024 or for the next 9 years (2025-2033). The inherited Roth IRAs must be closed by 12/31/2034.
Because he is ineligible for 2 months, they may agree to have her HSA contribution be $9,550 ($8,550 +$1,000) and his HSA contribution would be $833.33 ($1,000 x 10/12). Their maximum contribution is $10,383.33.
They should confirm with their tax adviser.
© 2025 Copyright Collin W. Fritz and Associates, Ltd. “The Pension Specialists”