establishing separate accounts for stretch IRA
I have read conflicting opinions about having to establish separate accounts to enable IRA to be stretched over multiple beneficiaries life expectancy. Has the law changed in recent years so that you can set up the separate accounts after the owner dies? I’ve read Publicaton 590 and it still wasn’t clear to me.
Permalink Submitted by Alan Spross on Tue, 2009-02-10 18:44
This is addressed on p 39 of Pub 590 (07 edition).
If there are several individual beneficiaries, the life expectancy of the oldest is used to determine the RMD divisor for all beneficiaries.
However, if separate accounts are set up for each beneficiary no later than the end of the year following the owner’s death, each beneficiary can then use their own life expectancy. Separate accounts can still be set up after this deadline, but in that case the life expectancy of the oldest would continue to apply to each separate account.
In 2004 an amendment was passed allowing each beneficiary to use their own life expectancy in the year the separate accounts are established if this is done following the year of death.