Minor beneficiaries
My question is, if a minor inherits an IRA what age will the RMD be calculated on? Is there a minimum age for the RMD calculation? If the minor is 5 years old, will the RMD be calculated at age five, or is there a cutoff – say at age 21?
Thank You
Permalink Submitted by Alan - IRA critic on Tue, 2016-11-15 22:14
There is no minimum age. The single life table has divisors all the way down to age 0. If the minor is 5 at the end of the year the minor inherits, the first RMD divisor is based on age 6 and is 76.7. However, age 21 is the cutoff for a minor to disclaim if longer than 9 months. If the owner passed after his RBD, a minor beneficiary like any other would have to complete the year of death RMD if not completed by the decedent.
Permalink Submitted by Christian Peterson on Thu, 2016-11-17 15:28
Was there a time when the minor had to calculate the RMD at the age of 21? When did this rule change?
Permalink Submitted by Alan - IRA critic on Thu, 2016-11-17 17:53
There has been no rule change in the last 3 decades. The current RMD Regs date back to 2001, and the summary of changes from the 1987 Regs to 2001 do not mention any such change. In many states an UTMA account on behalf of the beneficiary is named on the IRA agreement, RMDs are then distributed to the UTMA account and the minor has no access to the money until they reach the age of majority in that state, which would be somewhere between 18 and 21.