Inherited IRA confusion
This is an update of facts and confusion from a post 10 days ago
The original Trad IRA account holder died in 2019 at age 84, with no named beneficiaries. 2 nieces inherit based on the will. Estate wasn’t settled until 2021 due to covid. My client’s spouse, who is the younger of the nieces, receives funds in an Inherited (Beneficiary) IRA account in 2021. Tragically, my client’s spouse passes away in 2022 at the age of 55 and Vanguard allows him to open an Inherited (Beneficiary) IRA account because he is named as his spouses beneficiary.
Under what distribution rules does he fall – 5 Years from date of original owner, 10 years because of Secure act or Lifetime Stretch. CPA’s and Financial Planners aren’t sure, TIA for the help.
Permalink Submitted by Alan - IRA critic on Fri, 2022-11-18 22:58
Because owner’s estate is not a designated beneficiary, the owner’s remaining LE applies to the estate and all inherited IRAs created out of the estate. Therefore, after reset for the new tables in 2022, the 2022 divisor will be 5.7, then 4.7 for 2023 etc. All inherited IRAs will be drained in 2027 when the divisor reduces to .7. Client must complete spouse’s 2022 RMD using the 5.7 divisor if spouse did not complete it prior to passing.