IRA beneficiaries both charity and person (designated beneficiary) – problem?

Submitted by John Gjertsen on Thu, 2020-12-17 14:39

Is there any possibility of triggering non-DB distribution rules for the designated beneficiary if an IRA’s beneficiaries are 50% to a (non-DB) charity and 50% to (designated beneficiary) person?

I’m aware that there are issues if the beneficiary is a trust lacking the see-through language, but if the beneficiary is not the trust at all, I’m not sure if there’s a problem.



Submitted by Alan - IRA critic on Thu, 2020-12-17 21:05

  • I assume this question is intended to address the post Secure Act rules. The “beneficiary determination date” and the separate account rules still apply, so either the DB could create a separate account by the deadline or the charitable share could be distributed by the beneficiary determination date, and DB would still qualify for the 10 year rule. However, if these deadlines pass and both an individual and non individual beneficiaries remain, the RMD for the account will be that of the non individual. Therefore, if death is prior to the RBD, the 5 year rule will apply, and if death is on or after the RBD, the IRA must be distributed over the remaining life expectancy of the decedent. 
  • If the decedent was not too old, their remaining LE could well exceed 10 years, although annual RMDs would be required when they wouldn’t be if the 10 year rule applied.

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