Incorrect Beneficiary IRA Distribution election?
If we have a Beneficiary IRA and the non spouse beneficiary is 1 year older than the account holder, we understand he would be an EDB. the distribution election is shown on the account as 5-year. We believe this is incorrect. if this is the case, we will request a correction on the account. But our question is, can a Distribution election be corrected and or changed after the fact? Date of Death was in 2024 in this case is 2024.
Permalink Submitted by Alan - IRA critic on Tue, 2025-02-04 17:32
The deadline for this EDB to opt out of EDB treatment and into the 10 year rule is 12/31/2025, which is the date that the first EDB RMD would have been due. The election is irrevocable once made. Simply not taking the annual RMD does not automatically default the beneficiary into the 10 year rule unless the IRA agreement so states. Therefore, a clear election should be communicated to the IRA custodian by the deadline.
It is not clear why 5 years is indicated, as the 5 year rule has been replaced by the 10 year rule except for estate beneficiaries. Almost all IRA agreements will indicate life expectancy as the default option (unlike some qualified plans).