Inherited IRA RMD rules
Client (age 33) inherited her deceased husband’s beneficiary IRA.
The IRA was the deceased fathers who passed in 2014. It then passed to the mother and she passed in 2019. Then it went to the deceased husband as a beneficiary IRA, and he passed in 2021 at age 33. How would her RMD be calculated?
Permalink Submitted by Alan - IRA critic on Fri, 2024-02-02 16:14
Client cannot roll the inherited IRA to her own, and will be subject to the 10 year rule. She is not an EDB because she is a successor beneficiary, not a designated beneficiary. Therefore, the inherited IRA must be drained by 2031. However, it must also be determined if the original owner passed prior to or after his RBD. If he passed after his RBD, the client will have to continue the RMD schedule that applied to her husband, but in this case the 2022 and 2023 RMD penalties have been waived by the IRS, and we do not know about 2024 yet. If the original owner passed prior to his RBD, client will have no annual RMDs due for 2022-2030, but full distribution must be made by the end of 2031.
Permalink Submitted by Corey Staub on Fri, 2024-02-02 16:40
Person in their 30’s inherits 401k from deceased aunt in 2023 who was 77. However the deceased was still working in 2023, and thus, not subject to RMD in 2023.Note this person is more than 10 years younger than the deceased. She transferred the 401k into an inherited IRA in 2023. Does the 10 year clock start ticking in the year of death? Was she subject to an RMD in 2023 since the deceased was of RMD age, but not subject to one?2 opposing views from CPAs. thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2024-02-02 17:29
The participant passed prior to their RBD and therefore no 2023 RMD is due. The 10 year rule for the beneficiary begins in 2024 and ends in 2033 when the inherited IRA must be fully distributed. This all assumes that the decedent was actually not subject to RMDs due to being a >5% owner themselves or >5% owner under family attribution rules (eg working for company owned by their child). The beneficiary will not be subject to annual RMDs in years 1-9 if the participant passed prior to RBD.
Permalink Submitted by Diane Pearson on Fri, 2024-02-02 17:49
Father was age 72 when he died and taking distributions. Mother was only age 59. I am trying to find out if she re-titled the account into her own name or left as father’s inherited IRA. Mother died at age 64.