CARES ACT COVID-19 DISTRIBUTIONS AND SECURE ACT BENEFICIARY PAYOUTS: TODAY’S SLOTT REPORT MAILBAG

Thursday, June 25, 2020

By Ian Berger, JD
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

Hi Ed,

If a person takes that 100k distribution, can they elect to split evenly in 2020-2022 as income? Or can they determine how to apply the income?

Shannon

Answer:

Hi Shannon,

Those persons who qualify for up to $100,000 of 2020 coronavirus-related distribution (not everyone does) can spread out income evenly over their 2020-2022 tax returns. Or, they can choose to have all of it treated as 2020 income. No other choices are available.

Question:

Under the SECURE Act, are children of the deceased required to change to the 10-year rule after reaching age of majority? I’m reading conflicting information on this. It was my understanding that because they are an eligible designated beneficiary (EDB), they get the benefit of lifetime RMDs.

Also, are Non-EDB’s required to take yearly RMD’s? If yes, how are these calculated since they are not using the Life Expectancy Table?

Thanks for the insight!

Brenda

Answer:

Hi Brenda,

Even though minor children are EDBs, they can use the stretch only until they reach the age of majority (or, until age 26 if still in school). At that point, they are no longer EDBs and must switch to the 10-year payment rule.

The 10-year rule is satisfied as long as Non-EDBs (e.g., adult children or grandchildren) receive the entire account by the December 31 of the tenth year following the year of the original owner’s death. No annual RMDs during the 10 years are required.

Post Views: 0
Posted in: , , ,

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:

Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:

Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:

Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.