2nd Generation Inherited IRA RMD rules?
I know someone who’s wife inherited and IRA account from her mother in 2012. According to her husband he didn’t seem to think that she was ever taking any distributions or RMDS from that point forward. (It is possible that she could have been and he might be remembering wrong, or the amount was small enough that he didn’t notice.) Then the client’s wife passed away in 2021 and her husband inherited the beneficiary designated ira account from her. I am not as familiar with second generation inherited IRA rules can you let me know what the RMD requirement for the husband is? Is he subject to annual distributions currently? Or does he have the full 10 years before the entire amount is required to be distributed?
Permalink Submitted by Alan - IRA critic on Mon, 2025-02-03 21:55
A successor beneficiary is not responsible for the RMD shortfalls for any years prior to the year of death. Therefore, the husband (successor beneficiary) must calculate and distribute the year of death RMD for his wife in 2021.
Upon wife’s death in 2021, the 10 year rule kicks in, so the inherited IRA must be drained in 2031. However, due to delays in the IRS Secure Act Regs for 10 year rule beneficiaries, husband was not required to take any beneficiary RMDs in 2022-2024. So up to now, he is only responsible for the RMD for just one of the 12 years that have passed. But he must start beneficiary RMDs in 2025, determine the divisor that would have applied to her based on her age in 2013, and begin taking the correct beneficiary RMDs this year, in addition to making up the missed year of death RMD. Finally, he must file Form 5329 for 2021 requesting that the IRS waive the penalty for the late year of death RMD.