5 Year Rule for Beneficiaries
Hello,
Is is true that once a beneficiary starts the 5 year rule on an inherited IRA, the successor beneficiary must follow that schedule, even if they want to start taking life expectancy distributions?
Hello,
Is is true that once a beneficiary starts the 5 year rule on an inherited IRA, the successor beneficiary must follow that schedule, even if they want to start taking life expectancy distributions?
Permalink Submitted by Alan - IRA critic on Tue, 2018-03-20 23:30
Yes, that is correct. However, there is a gray area in determining whether the original beneficiary has clearly elected the 5 year rule or not. For example, in IRS PLR 2008 11028 a beneficiary who did nothing for a few years was allowed to use life expectancy and make up the missed distributions as virtually all IRA accounts specify life expectancy as the default method. IRA agreements may vary on what comprises an election into the 5 year rule, but once that election is made, then the succcessor beneficiary will have to drain the inherited IRA by the end of the same 5 year period.