Successor Beneficiary IRA – Example
Client is the successor beneficiary of a beneficiary IRA.
Original account owner (Sam) born in 1921 and died in 2010.
Original beneficiary (Tom) born in 1954 and died in 2022.
Successor beneficiary (Joe) born in 1961.
My understanding is the 10-year rule strictly applies (successor bene), and annual RMDs as original account owner was beyond RBD at death (died at age 89). Does the age of the original beneficiary matter in this case? What table am I using to determine annual RMDs?
If using the uniform tables, then the factor is 12.9 based on original account owner passing away at 89. But since Sam died in 2010, the factor would almost be negative if I did 12.9 minus 1 for each year since that time? Is that the right calc?
Permalink Submitted by Alan - IRA critic on Thu, 2022-10-27 22:06
The original beneficiary’s RMD schedule would just be continued by the successor, with the proper (reset for new RMD table I) 2022 divisor being reduced by 1.0 for 2023 and each year beyond. Then, the inherited IRA would have to be drained by the end of 2032 as well. Therefore, except for the 10 year deadline, the annual RMDs would be the same as they would have been under the pre Secure rules. Joe’s age is immaterial.
Permalink Submitted by brcwm on Thu, 2022-10-27 22:10
Thank you. I’m still not clear on what divisor to start with. Is it the Uniform table or the Single Life table? Is it Sam’s (orignal owner) age or Tom’s (original bene) age that matters?
Permalink Submitted by Alan - IRA critic on Thu, 2022-10-27 23:00
Non spouse beneficiaries always use the Single LIfe table, never the Uniform Table which is limited to IRA owners. However, since there are new tables starting in 2022, you must “reset” Tom’s divisor to what it would have been under the new tables. Since Tom was born in 1954, he would have been 57 in 2011, the year of his first beneficiary RMD. The new table shows 29.8 as the 2011 divisor had the new tables existed then. Subtract 1.0 for each year since 2011 and Tom’s 2022 divisor is 18.8. Joe must complete Tom’s 2022 RMD if Tom did not before passing. Joe will then continue to reduce that divisor by 1.0 each year, therefore his 2023 divisor will be 17.8, etc.