Inherited IRA
76 year old and I Inherited a Qualified Roth IRA from sister. I qualify as an Eligible Designated Beneficiary (EDB) and can take RMD distribution over my lifetime. When I pass, can I leave to my son who he can then do his own 10-year pay out?
If I chose to do a 10-year pay out and I pass before the 10-year (and never take any monies from account), can my son as beneficiary restart his own 10-year pay out?
Permalink Submitted by Alan - IRA critic on Thu, 2021-01-14 13:50
If you are an EDB, when you pass your beneficiary becomes subject to a new 10 year rule. Beneficiary must complete your year of death EDB RMD if you did not complete it. Then the 10 year rule starts for your beneficiary.
Technically, if you are an EDB there is nothing written into the Secure Act that provides an EDB the option of opting out of EDB status, although the IRS has not issued Regs yet. For EDBs inheriting over age 80, the 10 year rule would result in a longer distribution period and eliminate RMDs in the meantime, which runs contrary to the general intent of the Secure Act, so it is unlikely this will happen. However, if you were not an EDB and subject to the 10 year rule, when your son inherits he would not receive a new 10 year rule, but rather would only be allowed to complete your 10 year rule.
Permalink Submitted by helen roland on Thu, 2021-01-14 23:23
Jackson Life let me do the Inherited Roth as RMD and the Inherited Qualified IRA as 10-year payout. Let me do both.
Permalink Submitted by Alan - IRA critic on Fri, 2021-01-15 01:46
This could be due to exceptions for certain annuity products. Were either of these IRAs annuitized by sister?
Permalink Submitted by helen roland on Thu, 2021-01-21 12:16
68 years old sister never annunitized either annuities. I called other brokers and they said also I had option to do either RMD or 10 year. In Jackson now have one in RMD and the other in 10 year.
Permalink Submitted by Alan - IRA critic on Thu, 2021-01-21 20:56
Either Jackson is wrong, or they have an inside track to the IRS team working on the Secure Act Regs and have received the green light to allow an EDB to opt out of LE RMDs in favor of the 10 year rule. There is nothing in the Secure Act itself that suggests this option is available. Note that opting out of LE and selecting the 10 year rule means that when someone inherits the TIRA from you they will be limited to the time left on your 10 years. But a successor beneficiary of an EDB using the stretch (your inherited Roth), will get a new 10 years per the Secure Act.