inherited rmd grantor younger than beneficiary
Another IRA trustee is disagreeing with my interpretation of this situation and I’m looking for backup (or correction), as our mutual client is getting conflicting information.
Grantor, born in 1936, died in 2016. Qualified trust was beneficiary; oldest beneficiary of the trust was born in 1935. Since the grantor was younger, we’re using his life expectancy instead of the beneficiary’s. Based on the single life expectancy table, his divisor in 2016 is 10.2; subtracting one for 2017 gives a factor of 9.2 vs. the beneficiary’s divisor in 2017, which is 9.1.
Admittedly, it’s a minor difference, but in other situations, where the beneficiary is much older, it could be quite a difference in the RMD. Thanks for your help.
Permalink Submitted by Alan - IRA critic on Wed, 2017-12-06 20:55
You are correct. Per Reg 1.401(a)(9)- 5, Q 5, for deaths post RBD the applicable distribution is the longer of the IRA owners’s life expectancy of that of a designated beneficiary. It does not matter whether the trust was qualified or not, or even if the IRA had been left to the owner’s estate, the remaining LE of the owner applies. So, 9.2 applies here for 2017. It is rare enough for a designated beneficiary to be older than the decedent, so many people overlook this provision.