The rules explained in this article are prescribed by the recently enacted IRS regulations. These regulations are generally referred to as the "simplified regulations." While their simplicity could certainly be called into question, there is near unanimity among practitioners that these new regulations are clearer and fairer than the old regulations. However, one glaring area of inequity still exists. This inequity comes about when an IRA owner dies without naming a beneficiary, in which case the owner's probate estate will be the deemed beneficiary. The consequences of this will be larger MAD amounts. This is unfortunate because one of the main objectives of the new regulations was to eliminate the harsh tax treatment that the old regulations imposed upon innocent mistakes. Certainly, the failure of an owner to name a beneficiary would fall into the category of innocent mistakes. To solve this problem, the regulations could be amended to allow the probate estate to use the post-death IRA division rules; that is, the regulations could provide that if Inherited IRAs are established for the beneficiaries by September 30 of the year following the year of the owner's death, then the beneficiaries could avail themselves of the post-death division rules explained in this article (see Dividing Accounts After Death above). If the regulations were amended in this manner, the last vestige of inequity would be laid to rest.
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