Inherited IRA Question
Fact Scenario:
Original IRA Owner died 8/6/2013. Beneficiary was a Special Needs Trust set up for Daughter #1. Daughter #1 was taking life expectancy payouts under pre-Secure Act rules. Daughter #1 passed away 1/25/2022 (post secure act). Successor Beneficiary was original IRA owners 2nd daughter (daughter #2).
Question: What options are available to Successor beneficiary (Daughter #2). Can she set up Inherited IRA and continue life expectancy payouts since original IRA owner died pre-Secure Act or is she required to take balance within 10 years (8/6/2023) of original IRA owner.
FYI – The trust states upon the death of daughter #1, the trust terminates and distributes to daughter #2.
Permalink Submitted by Alan - IRA critic on Thu, 2022-12-29 15:55
The trustee of the trust should be able to assign the inherited IRA out of the trust to an inherited IRA for D 2. The 10 year rule will apply and the inherited IRA must be drained by 12/31/2032, not in 2023. D 2 would also have to continue the RMD schedule of the deceased beneficiary, but only if the IRA owner passed after their RBD.
Permalink Submitted by John Brennan on Thu, 2022-12-29 21:18
thank-you Alan.