Why would someone say….
“Once an IRA owner starts taking RMDs, the beneficiaries’ only options after the owner dies are lump-sum or out-in-five. They can’t stretch.”
The only thing I can think of are either a.) missing the first RMD and defaulting to lump-sum/5-year; or b.) non-individual/non-designated bene, but only if owner dies *before* RBD.
Barring those, a bene should be able to stretch, right? Am I missing something?
Permalink Submitted by Alan - IRA critic on Mon, 2018-02-05 17:10
The 5 year rule only applies for deaths PRIOR TO the required beginning date. For deaths after the RBD, the beneficiary can stretch, but if the estate is the beneficiary then the stretch is limited to the remaining life expectancy of the decedent, not the beneficiary. The quoted statement is incorrect.