Stretch IRA

Submitted by Robert Ervolina on Tue, 2020-01-14 17:06

My understanding is that a non-spouse designated beneficiary who elects a lifetime payout utilizes the single life expectancy table based on that individuals age in the year following the year of death of IRA holder. Specifically, my client passed away in 2019 age 65 and we established an inherited IRA last year, 2019. His son was sole beneficiary of the IRA and was 40 in 2019. So, am i correct that we will use single life table of a 41 year old this year?

Also, the successor beneficiary we named on the inherited IRA will utilize the son’s remaining life expectancy if the son passes correct?

What if the decedent was married and listed his spouse as sole beneficiary in the above scenario? In other words, lets assume he named his wife and she opted not to rollover the IRA into her IRA, but rather continue it as a beneficiary. Once the decedent would have attained 70.5 RMDS would begin for the surviving spouse. Whose life expectancy would be used if that would have occurred? The deceased or the surviving spouse? Would she use single life table? Also, would a successor beneficiary be “stuck” with her remaining life expectancy as well? I’m just confused as to the life expectancy. Thank you. Please note i realize she can rollover anytime. thx again.



Submitted by Alan - IRA critic on Tue, 2020-01-14 17:40

  • Yes, single life table for age 41 to calculate the 2020 beneficiary RMD. So he will get a 43 year stretch. If the client had passed this year his son would have been hit with the 10 year rule. 
  • However, the successor beneficiary named by the son will not be able to complete what is left of the 43 years because the Secure Act requires that the successor is subject to the 10 year rule. Therefore, the successor will have to drain the inherited IRA by the end of the 10 year period (perhaps 11 tax years), although the successor will not have annual RMDs.
  • If decedent’s wife instead inherited the IRA, her beneficiary RMDs would not begin until the year the decedent would have reached 72, but if she was younger she would typically maintain the IRA as inherited until passing 59.5, then elect to assume ownership of it. If she is the same age as the decedent, her Uniform Table RMD would be far less than the single life table for her age.  The decedent’s age is not a factor in her beneficiary RMD determination since he passed prior to the RBD. 
  • Now assume she names the son as her beneficiary. When she passes it will be under the Secure Act regime. Son will be subject to the 10 year rule whether he inherits her own IRA or her inherited IRA. He cannot continue her RMD schedule under the Secure Act provisions. ((Exception applies if he is disabled because then he would be an “eligible beneficiary” if he inherited her owned IRA, but not if he inherited her inherited IRA)).

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