EDB Status for OLDER beneficary

Submitted by Daniel Owen on Thu, 2022-10-06 14:10

The EDB Class for “Individuals not more than 10 years younger…” would that mean if beneficiary is older than the decedent they would meet that definition?

Example – non-married couple are naming each other as beneficiaries

John Doe – born 1953

Jane Donut – born 1949

Age difference = 4 years

So, so can name him for EDB Status for sure b/c he’s not more than 10 years younger than her, he’s 4 years younger. But should he also be able to name her and give her EDB status, b/c she’s also not 10 years younger, she’s 4 years older.?



Submitted by David Mertz on Thu, 2022-10-06 15:12

Someone who is older is not more than 10-years younger, so someone who is older will be an EDB.

Submitted by Alan - IRA critic on Thu, 2022-10-06 17:25

  • This example might illustrate another overly complex provision included in the proposed Secure Act Regs.
  • Suppose John passes after reaching his RBD. Jane is an older EDB beneficiary, who can take beneficiary RMDs using John’s longer LE, as under the old rules. But the proposed Secure Act Regs have included an additional requirement. Despite Jane taking annual RMDs using John’s longer LE, the additional requirement is that she must also monitor the year in which the inherited IRA would be drained under HER shorter LE. That year would be the year her divisor would have reached 1.0 or less. By the end of that year she must drain the inherited IRA, even though there were more years left using John’s longer LE. 
  • This provision is yet another unnecessary complication for financial planners, beneficiaries, and their IRA custodians to deal with. With any common sense, the IRS will forget that they ever came up with this one.
  • The IRS has never had control of beneficiary RMDs in the past. Substantially more complex Regs are not going to help them or anyone else to gain a modest level of compliance. 
  • There are several other overly complex and disputed provisions to be dealt with. Seems that the number of these will likely extend the time needed for these Regs to be finalized.

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