IRA BDA Question

Submitted by Kevin O'Hearn on Fri, 2022-07-29 13:16

Hello,

I have a client Rob who died in 2022, inherited the IRA from his father in 2016. His father is the original depositor and he had reached RBD and was taking RMD’s. The beneficiary of Rob’s IRA BDA is his spouse. We know she cannot elect “treat-as-your own”, but under the new rules she would like to know what her distribution options are. Is the 10 year rule the only option?

Thank you.



Submitted by Alan - IRA critic on Fri, 2022-07-29 15:58

  • Yes, she is subject to the 10 year rule, but in addition because the original owner passed after RBD, the proposed IRA Secure Act Regs indicate that she will have to take annual life expectancy RMDs in years 1-9 before draining the account in year 10. This provision of the proposed Regs is being contested by major retirement organizations, so it may or may not be included in the final Regs. Rob’s spouse or her advisors should certainly know the outcome before her first life expectancy RMD is due by the end of 2023. In 2022, she must complete Rob’s annual RMD for 2022 if he did not complete it. 
  • If the proposed provision is adopted, her annual RMDs starting in 2023 will continue Rob’s schedule of divisors based on his age, they will not be based on her age because she is a successor beneficiary. 


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