Inherited IRA Lifetime Income Annuity
Does the 10-year rule for inherited IRA’s preclude a designated beneficiary from putting an inherited IRA into a lifetime income annuity due to the fact that the payout over their lifetime could be longer than 10 years?
What if the IRA was inherited prior to 1/1/2020?
Permalink Submitted by Alan - IRA critic on Tue, 2022-07-05 14:40
The RMD Regs with respect to annuities, including the new proposed Regs do not address beneficiary annuitization, therefore most likely it is not permitted. You might ask an insurance company if they are aware of any IRS approved options for a beneficiary to annuitize. Of course, a beneficiary can inherit an annuitized IRA, but even those inherited IRA annuities must be issued in a form approved by the IRS RMD Regs for annuities. If the IRA annuity was issued to an IRA owner prior to 2020, the 10 year rule will not be imposed on the beneficiary when they inherit that IRA annuity.
Permalink Submitted by Bob Dillon on Wed, 2022-08-03 15:05
This statement is interesting to me: “If the IRA annuity was issued to an IRA owner prior to 2020, the 10 year rule will not be imposed on the beneficiary when they inherit that IRA annuity.” Does this apply to all IRA Annuities or only those that have been annuitized? MetLife provided me with several options regarding an IRA Annuity issued before 2020 that I inherited from my mother that had not yet been annuitized. One of these options was a 10 year deferal. I am inclined to take this option but was confused about RMDs during this 10 period. However, if the 10 year rule doesn’t apply to this account then RMDs are not a concern.
Permalink Submitted by Alan - IRA critic on Wed, 2022-08-03 17:09
This only applies to IRAs (and qualified plans) that have already been annuitized for life or joint lives during owner’s lifetime prior to 12/20/2019, the date of Secure Act enactment. If so, the 10 year rule will not apply to the inherited annuity.
Permalink Submitted by Alan - IRA critic on Tue, 2022-07-05 14:40
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