Beneficiary IRA
My understanding is that a non-spouse beneficiary has up to five years to withdraw the funds. If the non-spouse beneficiary dies within that 5 years, does their beneficiary have a new five years, the remainder of the original five years, or must remove funds right away?
Permalink Submitted by Jose Morales on Tue, 2015-03-31 15:35
When a non-spouse beneficiary inherits and IRA and then passes away, their beneficiary must continue with whatever distribution option the original beneficiary selected. They do not have the option of another five years or the use of their own single life expectancy.
Permalink Submitted by Alan - IRA critic on Tue, 2015-03-31 15:59
Also, note that the 5 year rule (option) only applies if the IRA owner passed prior to their required beginning date. It is not an option for IRA owner deaths after that date.
Permalink Submitted by walt mooney on Tue, 2015-03-31 17:03
The IRA owner was age 64, so I think the five year rule would apply, but the beneficiary is a 92 year old mother in poor health, and her benficiary is a 67 year old daughter.
Permalink Submitted by Alan - IRA critic on Tue, 2015-03-31 17:26
The IRA must be drained in 5 years either way then, but electing the 5 year rule will eliminate the exposure to a missed RMD every year but the final year. It is critical that the aged beneficiary name her successor beneficiary on the IRA ASAP.