Clarification: Whose Life Expectancy Is Used for Years 1–9 RMDs?
IRS final regulations:
“If the employee (IRA owner) died on or after the required beginning date and the beneficiary is not an eligible designated beneficiary, the annual RMDs during the 10-year period must be determined using the life expectancy of the deceased employee.”
(IRS Final RMD Regulations, July 2024)I need some clarification please: I have always thought that the RMD amount for Years 1-9 are based on the beneficiary’s single life expectancy and not the original IRA owner’s. And Ed Slott’s examples in his latest ‘LOUDER’ book seems to suggest the same (see Zoe example on page 195); but the Final regulation language seems to suggest for NEB, the original owner’s uniform life table must be used instead. Can someone clear this up?
Permalink Submitted by Alan - IRA critic on Thu, 2025-07-17 19:28
I can’t find that statement in the final Regs, although it would only be correct if the word “eligible” was deleted and it addressed a non designated beneficiary such as an estate or charity.
But for designated beneficiaries (that includes EDBs), the divisor per IRS Reg 1.401(a)(9)-5(d)(1)(ii) is the greater of the designated beneficiary’s remaining life expectancy or the employee’s remaining life expectancy.
What this means is if the deceased employee was younger than the designated beneficiary, the longer LE of the employee will apply. This option only applies when the employee passed post RBD.
Permalink Submitted by John Lau on Fri, 2025-07-18 00:20
Thank you Alan. And the citation is very much appreciated.
Permalink Submitted by John Lau on Fri, 2025-07-18 12:28
I don’t mean to keep beating a dead horse, but still need to clarify:
IRS Proposed Regs (Feb ’22) §1.401(a)(9)-5(e)(3)(i)(B) say:
“For a designated beneficiary who is subject to the 10-year rule, and the employee died on or after the required beginning date, the annual required minimum distributions are calculated using the deceased employee’s remaining life expectancy.”
Did the final regulation change this?
Permalink Submitted by Alan - IRA critic on Fri, 2025-07-18 20:22
Sorry, I am not finding any provision in the proposed Regs that differs from the final Regs in this respect. A search of the proposed Reg you indicated only generates an AI reference. I would not use AI with respect to IRS Regs, as I do not see where this particular Reg even exists.