RMD on Inherited IRA for minor
Howdy-
My client passed earlier this year and was NOT taking RMDs.
She left her Roth and Traditional IRAs to her minor age niece/nephew (age 16/13).
I have read that “minor children” must take RMDs per their age until reaching majority and then they are subject to the 10 year rule under the SECURE act.
However, I’m wondering, does it matter that these kids are not HER children? ツ
Also, given the decedent was not taking RMDs, are they subject in this year (2021) or beginning 2022?
-Joe
Permalink Submitted by Alan - IRA critic on Tue, 2021-12-07 20:55
Technically, the decedent’s RMD status depends on whether he passed prior to his RBD, or later. “Not taking RMDs” leaves some doubt relative to the RBD. Assuming client passed prior to RBD, there is no year of death RMD to be completed by the beneficiaries by year end. And to your question, these minors must be the children of the client for them to be considered eligible for the stretch at all. Since they are not her children, they are subject to the 10 year rule with no annual RMDs, but the inherited IRAs must be drained by 12/31/2031. Their custodian may want to make distributions in the interim years prior to 2031 to avoid a large taxable event in 2031.
Permalink Submitted by Joe Morgan on Thu, 2021-12-09 14:32
Great! Thank you!