IRA inherited Through Non Spouse Estate
A taxpayer inherited an IRA through an Uncle who passed in 2022, who was taking RMDs and who 91 years at the time of passing. The IRA passed through the estate before it was distributed to the nephew (age 55) in April of 2023. Would you please provide guidance on which distribution rules apply to this situation.
Under the proposed IRS regulations, the estate must take annual RMDs over the deceased IRA owner’s remaining single life expectancy (reduced by one each year that assets are left in the IRA).
OR
If the account holder’s death occurred after the required beginning date, the non-spouse beneficiary may:
- Take distributions based on the longer of their own life expectancy or the account owner’s remaining life expectancy.
Permalink Submitted by Alan - IRA critic on Thu, 2024-12-26 15:02
The second rule only applies to designated beneficiaries (individuals) who inherit directly. The first rule applies here because the estate inherited the IRA. Although the executor apparently assigned the estate inherited IRA out of the estate to the estate beneficiary, that does not change the RMD based on the decedent’s age. The correct decedent age here is the age the decedent would have been at the end of 2022 had they lived that long.
The beneficiary was also responsible for completing Uncle’s 2022 RMD if Uncle did not do so before passing.