Successor Beneficiary (BDA) Rules
Person A (who passed away in 2015 at 80 yrs of age), left his sister (person B) with an IRA. Sister was 78 yrs of age then and continued with her 7 RMD withdrawals from the inherited IRA, starting years 2016 through 2022 when mid-year she herself passed away. (Post Secure Act)
Person B had her daughter (Person C) as beneficiary on the inherited IRA. Person C, age 51, did not take any RMD in 2023 but unfortunately, passed away mid-year 2023. Person C had her spouse (52 yrs) Person D as beneficiary, who has the BDA IRA now.
a) Is Person D expected to take RMDs based on Person B’s passing away, i.e., 10 years from 2022?
b) Or is Person D subjected to original owner’s year of passing 2015, aka must withdraw all in 2025?
c) If option A, should the withdrawals be annual 2024-2032 or can be lumpsum any time up to 2032?
d) None of the above?
Thank you
Permalink Submitted by Alan - IRA critic on Mon, 2024-04-22 15:34
a) Yes. Person C would have had to continue the RMD schedule of B from 2023-2031 and subject to the 10 year rule, and the same for D – except that the IRS has waived these beneficiary RMDs for 2023 and 2024 (Notice 2024-35). D steps into the shoes of C and therefore must drain the inherited IRA in 2032.
b) No
c) D is not responsible for any prior year RMDs of C because the IRS has waived the penalties for C for not taking the 2023 beneficiary RMD. The IRS intends that 2024 is the last year for these waivers, so D will likely have to resume the RMD schedule of B in 2025. D must drain the inherited IRA by 2032 but can do so at any point prior to 2032.