SUCCESSOR BENEFICIARIES

Submitted by Al Figliolia on Tue, 2016-03-29 15:04

A CLIENT PASSED AWAY AND PASS HIS IRA ON TO A NON SPOUSE BENEFICIARY.
SHORTLY THEREAFTER HE PASSED AWAY AND LEFT A BENEFICIARY.
PLEASE ADVISE WHAT OPTIONS ARE AVAILABLE TO THE NEW BENEFICIARY, REGARDING HIS DISTRIBUTION CHOICES
THANKS,

AL FIGLIOLIA



Submitted by Alan - IRA critic on Tue, 2016-03-29 16:04

The successor beneficiary must continue the RMD schedule of the deceased designated beneficiary. He is not allowed to change over to his own life expectancy. He will have to determine the age of the designated beneficiary as of 12/31 of the year following the year the IRA owner passed to determine the divisor the designated beneficiary used for that year. Each year thereafter that divisor must be reduced by 1.0. This assumes that the designated beneficiary did not elect to use the 5 year rule rather than life expectancy RMDs.



Submitted by Al Figliolia on Tue, 2016-03-29 16:53

Thanks



Submitted by Al Figliolia on Wed, 2016-04-20 19:22

Do we have an IRS  reference point that I could be referred to?Thanks



Submitted by Alan - IRA critic on Wed, 2016-04-20 19:33

The following is from IRS Pub 590 B, p 9:

Death of a beneficiary. In general, the beneficiaries of a deceased beneficiary must continue to take the required minimum distributions after the deceased beneficiary’s death, based on the distribution schedule established by that beneficiary under the rules in the following paragraphs. The beneficiaries of a deceased beneficiary do not calculate required minimum distributions using their own life expectancies. For the exception to this rule, see Death of surviving spouse prior to date distributions begin, later.



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