Paring out successor bene options under SECURE 1.0

Submitted by Robert Vashko on Fri, 2023-05-12 14:20

IRA owner dies in 2018 at age 85. So, pre-SECURE, but post-RBD. Leaves IRA to older sister who inherited at age 97, and just died at 102. Her benes (the successor benes) are her kids, in their mid-60’s. Let’s assume for simplicity that SIster was stretching using her Table I L.E.

The way I see it, the successor benes, inheriting post-SECURE, have the option of a 10-year payout max (or less, if they want), but must still take out stretch RMDs through year 9 because the original IRA owner died post-RBD. Is that correct?

My other thought is that at age 102, the original bene’s RMD must have been close to 45%, so unless that account was huge (I don’t have the value), Sister’s RMDs over the last several years have probably whittled that account down to almost nothing.

So even if the successor benes could adopt the original bene’s stretch schedule, it might provide even less flexibility than the 10-year option, given the original bene’s advanced age.

Did I get anything wrong or miss anything? Please and thank you.



Submitted by Alan - IRA critic on Fri, 2023-05-12 15:53

  • Yes, the main overlooked rule here is that the older sister is entitled to use the “longer of” rule, ie the longer of her LE or that of the younger IRA owner. This only applies for deaths post RBD. Her divisor would therefore have been 6.6 for 2019. Ignoring the 2022 divisor reset to simplify this example, the owner’s remaining LE only adds about 3 years to the life of the inherited IRA with a divisor of 2.6 for 2023. Despite the owner being 12 years younger, the divisors reduce very slowly at advanced ages, therefore only about 3 years is added using decedent’s LE.
  • The 10 year rule applies to the successor beneficiaries, but as you said, the successor beneficiaries must continue the RMD schedule of their deceased mother, so the inherited IRA will be drained in about 2 years rather than in 10 years. For the successor beneficiaries the 10 year rule therefore becomes a non factor.

Submitted by Robert Vashko on Fri, 2023-05-12 20:28

Thanks.  You already addressed my follow-up question of whose RMD schedule does the (10-year) successor bene use in a case like this – their own, or the schedule or the original stretching bene.

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