Inherited Inherited IRA scenario
HI folks,
Looking for some input on this scenario.
1) Barbara is 59 when she passes away suddenly in 2000. Never withdrew from her IRA.
2) Her younger brother Phil inherits the IRA as a sole beneficiary. What was his required date to commence RMDs? Age 70? If so, he turned age 70 in 2012 and, I assume, would have started taking distributions based on his single life expectancy at that time (I assume about 17 years based on tables available at that time). So he would have taken 1/17th, 1/16th, 1/15th of the IRA balance each successive year. Does that sound correct?
3) Phil dies in 2020 (post-secure act). He leaves me his IRA as a sole beneficiary. Given that it is post secure, does the clock reset and I have an additional 10 years (from the time of death) to empty his IRA or must I now continue to take distributions based on his imputed remaining life expectancy (1/9th of balance, 1/8th of balance next year, 1/7th of balance in 2024, etc).
Any particular scenarios that would alter these calculations? (I know broad question but I mean major scenarios, not granular details).
Thanks and Happy Thanksgiving to all. I am in awe of the input provided on this site (many thanks to Alan and Bruce, the estate planning and IRA rules GODS!!!)
SR
Permalink Submitted by David Mertz on Sat, 2021-11-20 13:05
Phil was required to either take annual RMDs based on his life expectancy beginning with the RMD for 2001, or to use the 5-year rule and completely drain the inherited IRA by the end of 2005. Because Phil’s age on his birthday in 2001 was 59, his 2001 life-expectancy divisor was 26.1, reduced by 1 for each subsequent year. His divisor in 2012 was 15.1. Since the account was not fully drained by the end of 2005, Phil was presumably taking RMDs based on his life expectancy.
With Phil’s death occurring in 2020, as successor beneficiary to Phil you are subject to the 10-year rule, requiring the account to be drained by the end of 2030 but with no annual RMD requirement.