inheriting an inherited IRA
Non-spouse beneficiary inherited an IRA in 2009. Original IRA owner’s DOB was 4/17/45; non-spouse beneficiary’s DOB was 06/11/73. Non-spouse beneficiary was taking distributions based on their own life expectancy until last year (2023) when the non-spouse beneficiary died. Note that the 2023 RMD had already been taken prior to their death. Their spouse has now inherited the inherited IRA.
Based on new SECURE 2.0 rules, what RMD distribution schedule should be followed? 10 year rule, with the same distribution schedule (at a minimum) for 9 years that original non-spouse beneficiary was following and then full balance distributed by 10th year? Or does some other rule now apply?
Permalink Submitted by Alan - IRA critic on Mon, 2024-01-08 23:58
The 10 year rule will apply to the successor beneficiary. But since the original owner passed prior to RBD, annual RMDs in years 1-9 will not be required from the successor beneficiary.
Permalink Submitted by Linda Taylor on Tue, 2024-01-09 00:41
Thank you! So did the original non-spouse beneficiary also not have to take RMDs, based on the 2009 inheritance when original owner was prior to RBD? May have been doing that wrong, not that it matters now.
Permalink Submitted by Alan - IRA critic on Tue, 2024-01-09 01:13
The original beneficiary was required to take annual RMDs, but the Secure Act changed the rules for deaths after 2019 with the 10 year rule. Under the Secure Act rules, if the IRA owner passes prior to RBD, a beneficiary subject to the 10 year rule does not have to take annual RMDs in years 1-9. In your case, the successor beneficiary (Death of designated beneficiary after 2019) is subject to the Secure Act rules.
Permalink Submitted by Linda Taylor on Tue, 2024-01-09 04:04
Thank you very much for your help!