inherited IRA
Beneficiary (younger than 70.5) inherited an IRA two years ago. Beneficiary has not withdrawn any money.
Decedent was younger than 70.5 (RMD had not begun).
I assume entire account must be drained by year 5?? I assume stretch is lost. Any other options?
Permalink Submitted by Alan Spross on Mon, 2010-07-05 00:14
The beneficiary has not lost the stretch option.
Decedent apparently passed in 2008, meaning that the first RMD year for the (assumed non spouse) beneficiary is this year because all RMDs were waived for 2009. Therefore, the first RMD must be taken prior to year end 2010.
In addition, even if death was prior to 2008, the letter ruling described by Ed in the attached link provides a way to salvage the stretch option, subject to making up delinquent RMDs and paying the 50% penalty. But in this case, the relief in the following is not even needed:
http://www.financial-planning.com/fp_issues/2008_7/saving-stretch-613061…