Determining EDB status for inherited IRA
IRA owner dies at age 58 in 2017. His beneficiary is his mother, who is 80. In 2022, mother dies and leaves the inherited IRA to her two surviving children (the original account owner’s siblings). They are not disabled, chronically ill, or under age 21. Both siblings are within 10 years of age of the original account owner, but not within 10 years of their mother (obviously). Are they EDB’s? Or put it another way, is the 10 year rule based on the original account owner, or from whom the IRA was inherited?
Permalink Submitted by Alan - IRA critic on Mon, 2024-12-30 13:29
A successor beneficiary can never be an EDB because an EDB is limited to designated (by the owner) beneficiaries. Therefore, if a child was disabled it would not matter, and their ages also do not matter.
They must continue the RMD schedule that applied to mother, reducing her divisor by 1.0 each year, and the 10 year rule also applies requiring the IRA to be drained in 2032. However, due to mother’s age the annual RMDs will drain the account in 2028 when the divisor will drop to less than 1.
In addition, due to the delay in the IRS final Secure Act Regs and Notices 2023-54 and 2024-35, the beneficiary RMDs of the children were waived for 2023 and 2024, but must resume in 2025. They were also responsible for completing mother’s 2022 RMD if she did not do so and that RMD was not waived.