Question on SECURE’s proposed regs re: At Least As Rapidly
Just making sure I am reading this right –
IRA Owner died at age 74, having already hit his RBD. 44-y.o. Beneficiary (designated, but not eligible-designated) must take RMDs for years 1-9, and then empty the account in year 10. So far, so good.
What RMD schedule does Beneficiary use? Do they use their Table I factor and “-1” each year (basically, what they would have done prior to SECURE), or does “At Least As Rapidly” mean they must continue the deceased owner’s Table III RMD schedule for years 1-9?
I am pretty sure it’s the former (again, pre-SECURE rules), not the latter. I’m right, right?
Please and thank you.
Permalink Submitted by David Mertz on Mon, 2022-04-11 18:43
Yes, the former.
Permalink Submitted by Robert Vashko on Mon, 2022-04-11 19:05
Thank you!I guess in terms of “at least as rapidly,” I’ve never been clear on how to define that phrase. When they say you must draw down the account “at least as rapidly,” do they just mean you must withdraw on an annual schedule as the IRA Owner was doing while alive?Because if you are a younger bene and using your own L.E. on Table I, you will likely not be exhausting the account as “rapidly” as the Owner would while alive on their Table III schedule.
Permalink Submitted by Alan - IRA critic on Mon, 2022-04-11 19:19
The separate account rules continue to affect the annual LE RMDs when there are multiple beneficiaries. If they are established by the deadline, they can each use their own single life expectancies for years 1-9, otherwise the beneficaries would have to use the age of the oldest.
“At least as rapidly” refers to a former IRS interpretation that an older beneficiary inheriting after RBD should be allowed to use the LE of the decedent, instead of that beneficiary’s shorter life expectancy. This interpretation was preserved in the proposed Secure Act Regs. But because a beneficiary can never use the Uniform Table, the actual beneficiary RMDs with the single life table are almost always larger than what the owner’s RMD would have been under the Uniform Table.
Permalink Submitted by Robert Vashko on Mon, 2022-04-11 23:08
Thanks, Alan.
Permalink Submitted by Charles Caldwell on Sat, 2022-04-23 15:29
I inherited a traditional IRA from my 83 year old mother when she died in 2016. I have been taking RMD’s each year since then. I was 58 back in 2016 and now almost 63. How am I now affected? I cant figure it out. Charles Caldwell
Permalink Submitted by Alan - IRA critic on Sat, 2022-04-23 16:11
You are not affected because you inherited prior to the Secure Act, and should continue to take your annual life expectancy RMDs. However, there are also new RMD tables effective in 2022 which will slightly reduce your RMDs compared to what they would have been without the new tables. If you attained age 59 on your birthday in 2017 your divisor for 2022 after adjustment to the new table is 23.0. Then reduce that divisor by 1.0 for each year after 2022.
The Secure Act will affect YOUR beneficiary. When you pass, your beneficiary will be subject to the 10 year rule, and under the new proposed Secure Act regulations (not yet final), would have to continue your RMD schedule for the first 9 years, then drain the account in the 10th year after your death.