Definition
A written document, wherein the beneficiary irrevocably refuses to accept assets they would otherwise inherit. The disclaimer must meet the following requirements in order to be qualified:
- It must be an irrevocable and unqualified refusal to accept interest in the property
- It must be in writing
- It must be received by the holder of the property ( for instance an IRA custodian or plan administrator) no later than :
- 9 months after the owner of the property dies or if later
- 9 months after the beneficiary reaches age 21
- The beneficiary must not have accepted any interest in the property- for instance, the beneficiary must not have taken any distributions from the retirement account
- The assets must pass to the new beneficiary without any direction from the person making the disclaimer ( disclaimant)
Under a retirement plan, the new beneficiary would be:
- Any other primary beneficiary of the retirement account, if there is no other primary beneficiary
- The contingent beneficiary(ies) of the retirement account, if there are none
- The beneficiaries as determined by the default provisions of the plan agreement
Referring Cite
IRC § 2518, State law
Additional Helpful Information
- A beneficiary can make a partial disclaimer or disclaim the entire interest
- Disclaimants should consult with a tax planning attorney or other tax-expert on how a disclaimer would affect them from a financial and tax perspective
- A beneficiary’s disclaimer of a beneficial interest in a decedent’s retirement account is still qualified even though prior to making the disclaimer, the beneficiary receives from the required minimum distribution for the year of the decedent’s death. Rev. Rul. 2005-36
