Extended Probate (almost 2 years after death) due to COVID. What date does the 5 year clock for required distribution start?
My brother-in-law passed December 2, 2019. My husband (brother) is the sole beneficiary of the estate. Probate just closed this month. One of the deceased IRA accounts did not have a designated beneficiary listed. Because a designated beneficiary was not listed the funds need to be distributed within 5 years. But is that 5 years from date of death? or 5 years from when probate ended?
Permalink Submitted by Alan - IRA critic on Fri, 2021-11-12 22:14
It’s 5 years from the end of the year of death. However, the CARES Act included a provision to disregard 2020 when counting the 5 years. Therefore, under the 5 year rule, there are no annual RMDs required, but the entire inherited IRA must be drained by 12/31/2025. The 5 years starts 1/1/2021. The executor of the estate should be able to assign the inherited IRA out of the estate to your husband, so he will have his own inherited IRA to manage.
Sounds like he also inherited another IRA on which he was named as the designated beneficiary and was therefore not part of the probate estate. Your husband can stretch that inherited IRA over his life expectancy with the first RMD due before year end. 2020 RMDs were waived.
Since these inherited IRAs will have different RMD requirements, they cannot be combined into a single inherited IRA.