rate of distribution on bene IRA inherited from nonspousal b
I am looking for the information on the inherited bene’s beneficiary information. Should the inherited bene die before depleting the IRA and leaves it to her beneficiaries, what is the rate of distribution on those beneficiaries. Thanks again for all the info.
Permalink Submitted by Alan Spross on Thu, 2009-02-12 21:59
This was answered in your other post.
The life expectancy of the original beneficiary is continued by the successor beneficiary. The successor beneficiary would need to determine the age of the original beneficiary in the year following the owner’s death. The original divisor in the Single Life Table for that year is determined. Each year thereafter, that divisor is reduced by 1.0 through the life of the original beneficiary and the successor beneficiary. Therefore, the successor beneficiary’s age does not matter.
Example: Owner dies and beneficiary reaches 50 in the year following death. Divisor is 34.2 in that year, 33.2 the next year etc. In the 10th year after owner’s death the divisor is down to 25.2 and the first beneficiary dies. The successor beneficiary uses 25.2 in that year if the RMD had not been taken, then 24.2 the next year etc.
This reduction of 1.0 each year is known as the non recalculation method because the increased life expectancy of the beneficiary from having lived another year is never recognized.