Secure Act – minor as eligible beneficiary

Submitted by Alan - IRA critic on Tue, 2019-12-31 19:25

Apparently, a minor child of the IRA owner qualifies for an extension of the state maturity age if they are a “qualified student”. I have read two major consultant summaries that reference this situation, but cannot locate the definition of “qualified student” that would be applied. This suggests the potential of an additional 6-7 years of continued low LE RMDs after the age of 18 before the 10 year rule kicks in for certain students. If so, these minors might maintain an inherited IRA till their mid 30s. Should a minor move directly into qualified student capacity, I assume that just one semester where they drop out or fail to carry enough hours would irrevocably trigger the 10 year rule, but am looking for assistance in tracking the tax code path. Start with Definitions in Sec 401 of Secure and “Special Rule for Children”, subject to sub paragraph F.



Submitted by Bruce Steiner on Wed, 2020-01-01 15:55

  • A bunch of us some of whose names you’d recognize have been trying to figure this out.
  • A well-respected lawyer thinks that the student should be given the benefit of the doubt and be permitted to self-designate, noting that the potential for abuse is limited by the fact that the exception ends at age 26 in any event.  He also suggests that people might want to submit comments to the IRS on this.
  • This will probably only affect a small percentage of IRA owners, since the children of most IRA owners who die with substantial IRAs are usually over age 26.  Also, if the IRA has to be distributed within 10 years after the exemption ends, the child may want to take distributions while in school and presumably in a lower tax bracket.
  • Bruce Steiner

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