How does changing beneficiaries affect RMDs?

Submitted by Kay Barden on Mon, 2023-02-20 22:49

I am changing beneficiaries on two inherited IRAs (right now my estate is the beneficiary because no benes have been specified):

1. IRA #1 original owner was my father who died in 2018, inherited by my sister who died in 2020, inherited by me. It looks like my sister was taking out RMDs based on her LE before she died. When I claimed it, I specified RMDs over 10 years but it looks like this was ignored because the divisor didn’t change that much. Either they ignored it, or the rules disallowed 10 years and the default was her LE designation? In any case I prefer a longer RMD stretch.

2. IRA #2 original owner was my sister who died in 2020, I’m an eligible designated beneficiary so can take out RMDs over my LE.

My beneficiaries for both accounts will be my two siblings who are 3 and 6 years older than I am, then per stirpes their children.

As I was filling out the beneficiary paperwork I noticed “Changing your beneficiary may affect your required minimum distribution.” I haven’t been able to find out how? My goal is for my RMDs to be as low as possible.



Submitted by Alan - IRA critic on Tue, 2023-02-21 00:37

Your RMD situation is very data specific. Would need to know the years of birth of father, sister, and yourself to determine what RMD obligations you have for these two inherited IRAs. Also, note that whoever you name as your own beneficiary will have no affect on your own RMDs. For IRA 1 you are a successor beneficiary, and for IRA 2 an EDB primary beneficiary. Your own beneficiaries will all be successor beneficiaries. Successor beneficiary RMDs depend on whether the original owner passed prior to RBD or not, which is why your years of birth are needed.

Submitted by Kay Barden on Tue, 2023-02-21 01:25

Thanks, that’s helpful.  Since my RMDs will be unaffected regardless of who I name as beneficiaries, I’m curious in what situations RMD amounts or withdrawal periods are affected by changes in beneficiaries.  

Submitted by Alan - IRA critic on Tue, 2023-02-21 01:57

  • An owner’s RMDs will change when a sole spousal beneficiary who is more than 10 years younger is changed to any other type of beneficiary. That would change the table from the joint life table to the Uniform Table, increasing the RMD for the owner. This is the only change that would affect an owner’s own RMDs, and is likely what the warning was referring to.
  • Any beneficiary who files a qualified disclaimer by the disclaimer deadline is not treated as a beneficiary with respect to the RMDs for other beneficiaries and that could change the RMDs for the others. But this is a beneficiary change affecting other beneficiaries. 
  • Whoever you name (or whatever entity you name) for your inherited accounts has no effect on your beneficiary RMDs.

Submitted by Kay Barden on Tue, 2023-02-21 02:25

Thanks so much.

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