Eligible Designated Beneficiary
401(k) participant, 57, died in 2023
2 sons were age 17 & 20 – both were minors at the time of their dad’s death – such they qualify as EDBs
IRS guidance – Notice 2024-35 did not include EDBs in the waiver – is this correct? Assuming so, the minor beneficiaries would need to take their initial RMD (based of their single life expectancy) by December 31 2024?
Thank you in advance
His question was: “A client passed away at age 57 in 2023 with a 401k left to his two sons. A the time, they were 17 and 20 and now in 2024, they are 18 and 21. RMDS were waived for 2023 and 2024. Does the 10 year rule apply to each of them now? With no RMDS but balance needs to be zero by 2033?”
Permalink Submitted by Alan - IRA critic on Fri, 2024-10-25 13:29
There is no waiver for EDBs.
But the final Regs indicate that the older child is still considered an EDB until the younger child reaches 21 and the 10 year rule does not kick in until then.
Edited for correction: The above is incorrect. The younger one will not fail to be an EDB once the older one is no longer an EDB, and the older one is no longer an EDB after reaching 21. Therefore, the 10 year rule kicks in at different times (when the applicable beneficiary reaches 21).
Also, note that when the 10 year rule kicks in for each beneficiary, the annual RMD schedule used while still minors must be continued through the end of the 10 year period.
Permalink Submitted by Kevin Brown on Sun, 2024-10-27 14:05
Removed as I found the answer to my followup question.