inheriting non-qualified annuity
Individual is inheriting NON-qualified annuity. the annuitant died 5-24-2016. beneficiary date of birth is 10-16-1953. As i understand the inherited assets must be put in stretch position no later than 5-24-2017 however i am hearing conflicting statements as to whether the beneficiary must take a distribution for 2016 or if distributions begin in 2017 based on account value as of 12-31-2016? If a 2016 distribution is required what age would be used for the beneficiary?
Permalink Submitted by Alan - IRA critic on Thu, 2017-04-20 22:00
A 2016 RMD is not required. The first beneficiary RMD is calculated using the 12/31/2016 account value and follows the qualified plan and IRA RMD rules EXCEPT THAT the first life expectancy RMD must be distributed within 1 year of the owner’s death calculated using beneficiary age as of the end of that year. The second beneficiary RMDs must be distributed no later than 12/31/2018. The period between 5/24/2017 and 12/31/2017 should be one without a distribution unless a non RMD distribution is desired. Further, if the first LE RMD is not completed within 365 days after owner’s death, the IRS in PLR 2015 32026 found that the 5 year rule per Sec 72(s)(1)(B) would then apply for RMDs in lieu of the LE method.