5 year rule for non-spouse beneficiary deceased over age 70 1/2

Submitted by Karin Rettger on Tue, 2018-09-11 14:51

Can you clarify; does a non-spouse beneficiary have the option to take the distribution over 5 years if the deceased owner was over age 70 1/2? Thank you.



Submitted by Alan - IRA critic on Tue, 2018-09-11 16:31

  • The key age is 4/1 of the year following the year the owner reached 70.5. That date is the required beginning date (RBD) for the owner. The owner must have passed PRIOR TO that date in order to elect the 5 year rule. Passing on or after that date the beneficiary must take annual RMDs based on their life expectancy, or that of the owner if the beneficiary happens to be older than the owner.
  • That said, the beneficiary can always distribute more than the RMD. If desired the beneficiary could still withdraw the amount over 5 years as long as at least the annual RMD amount was distributed in each year.
  • The beneficiary is also responsible for completing the year of death RMD of the owner if the owner did not complete the RMD before passing.

Submitted by Karin Rettger on Tue, 2018-09-11 18:53

Thank you!   Also, is it possible for a non-spouse beneficiary to disclaim the IRA and give it to a charity?  I think the intent here would be to pass it tax free to the charity.   I don’t believe so, but would appreciate your input.   Thank you.

Submitted by Alan - IRA critic on Tue, 2018-09-11 19:00

The beneficiary cannot select where the funds go if disclaimed. If the charity had been named as a contingent beneficiary, then a qualified disclaimer would result in the inherited IRA going to the charity. This would also be possible if the default beneficiary in the event of a disclaimer were the estate of the decedent and the charity was the beneficiary under decedent’s will.

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