I'm trying to help some family friends. They are two sisters who are beneficiaries (descendants, per stirpes) of an Inherited IRA.
They would like to disclaim this and have it go to their kids (they each have 3 kids, so it would go to them equally).
They turned in some paperwork within the nine-month window as their IRA Custodian had advised in order to be considered a "qualified disclaimer". However, now IRA Custodian is saying they needed something else. They are disputing this. However, if is it considered "non-qualified disclaimer", how is this treated? Are they taxed on it if they have disclaimed it outside the nine-month window? This is not a sizable estate, so they don't get into estate tax limits and those issues.
As I understand/interpret it, they would not be taxed on this disclaimer, even if it is considered non-qualified. Again, as I understand 26 CFR Sec. 25.2518-1(b), what is passed to the children is considered a gift, and if the gift is over the $15k annual gift tax exemption, it would mean the sisters need to fill out a gift tax return, but as long as that fits within each of their lifetime estate/gift tax exemptions (which they assume it will), their children will not be taxed on receiving it; the children would only be taxed as they take distributions within the required 10 yr period after the age of majority.
Is that correct?
@Anonymous_ is this your understanding?
