Disclaim means to decline to accept inherited assets. A disclaimer may be made for a variety of reasons, including tax planning, estate planning, and allowing someone else to inherit the assets. A valid disclaimer requires that the disclaimant must not have taken possession of, or accepted, any of the inherited assets prior to the disclaimer. Distributing any of the amounts inherited under a retirement plan qualifies as an acceptance.
This rule caused problems when the decedent had died before taking the required minimum distribution (RMD) for the year of death. On June 27, 2005, the IRS issued Revenue Ruling 2005-36, which explains that if a beneficiary distributes the decedent's RMD for the year of the decedent's death, that distribution is not an acceptance. Therefore, a beneficiary may still disclaim the inherited assets if he/she receives the RMD for the year of the retirement account owner's death.
