IRA inherited by a non-spouse beneficiary

Submitted by Robert Gibb on Mon, 2023-04-17 16:35

A non-spouse in her 60’s inherited an IRA from her uncle who was in his 80s and taking RMDs.

Can the non-spouse beneficiary wait until the end of the 10th year to take a full distribution?

Or does she have to take an annual RMD starting the year after the uncle’s death. Is the RMD based on her age or does she continue the uncle’s RMD schedule?

There is a lot of confusion since the IRS has been vague regarding the 10 year rule in the SECURE Act for non-spouse beneficiaries.



Submitted by Alan - IRA critic on Mon, 2023-04-17 17:28

Because uncle passed after RBD, the non spouse beneficiary must take annual RMDs in years 1-9 of the 10 year rule, and then fully distribute the account by the end of year 10. The annual RMDs are based on her age in the year after uncle’s death, and she also must complete uncle’s year of death RMD if he did not do so.

Submitted by Robert Gibb on Mon, 2023-04-17 18:42

what if the decendent were pre RBD? The beneficary could wait until the end of the 10th year to withdraw funds, correct?

Submitted by Alan - IRA critic on Mon, 2023-04-17 19:02

Yes, correct. That said, the beneficiary may want to voluntarily take distributions over the 10 years to avoid a large distribution in year 10 that would likely be taxed at a higher marginal rate due to the amount of that distribution.

Submitted by Jay Wiedwald on Tue, 2023-04-18 00:00

Alan, you could spend a lot more time on the golf course if you had a decision tree to settle all these questions. Seems like an obvious application. What am I missing?

Submitted by Robert Gibb on Tue, 2023-04-18 18:35

Isn’t there the real possilbilty that the IRS can change the inherited IRA distribution rules in the SECURE ACT whereby the non-spouse beneficiary would have to take an ANNUAL distribution from the inherited IRA and deplete the account by the end of the 10th ydear. 

Submitted by Alan - IRA critic on Tue, 2023-04-18 19:34

For deaths prior to RBD, the proposed Regs would NOT require annual RMDs in years 1-9. There is little chance that they will change their mind on this at this point. They are already embarrased by having changed their mind about annual RMDs within the 10 year rule when the participant passed post RBD. All the debate has been about deaths post RBD, not death prior to RBD. The possibility that annual RMDs will be required for deaths prior to RBD is very remote. The concept of “at least as rapidly” as the participant was taking RMDs does not apply to deaths prior to RBD since the participant is not taking RMDs.

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