When a credit union member dies, his or her individual retirement account receives separate share insurance coverage in most instances, according to an NCUA legal opinion letter.
The NCUSIF’s $250,000 maximuim coverage continues for the inherited IRA, separate from any other IRAs and other accounts that beneficiary has, as long as these conditions are met: The IRA is kept in the name of the original owner; the Internal Revenue Code considers the inheritor to be a qualified designated beneficiary; the Internal Revenue Code recognizes the continued existence of the IRA; and the inherited IRA isn’t comingled with any other IRAs.
NCUA Associate General Counsel Hattie Ulan noted in a letter to Stanley R. Niman of Portland, Ore. that many questions relating to the inheritability of IRAs are governed by the Internal Revenue Code and other tax laws.
“These tax-related issues can be complex and are outside the purview of the NCUA. We recommend that members fully understand these tax considerations as part of their overall financial planning and account structuring for share insurance purposes,” she wrote.