Stretch IRA beneficiary
Scenario – A son is the beneficiary of his Mom’s IRA and he sets up a stretch IRA at her death – his RMDs are based on his life expectancy using Table 1 from Publication 590. The son names his daughter (i.e., the granddaughter of the original IRA owner) as the beneficiary of the Stretch IRA and then he dies. My question is what is the basis of the RMDs for the granddaughter after the son died – are you required to use the life expectancy that was used by the son from the original inheritance of the IRA or does the granddaughter now get to use her life expectancy?
It is also assumed the original IRA owner had started to taking RMDs.
Permalink Submitted by Jose Morales on Thu, 2011-06-30 16:08
Because the first beneficiary was a non-spouse they didn’t have the option of treating the IRA as their own, and therefore passing along the opportunity for their own beneficiary to use their own life expectancy to stretch out beneficiary payments.
Permalink Submitted by tomd37 on Thu, 2011-06-30 16:09
Son’s daughter has to use the same process and factor her father was using. That is, his factor at the first year of his RMD decreased by 1.0 each succeeding year.
Tom D.