Inheriting an Inherited IRA and the SECURE Act

Submitted by Steven Williams on Thu, 2020-01-16 20:44

Let’s say a mother died in 2019 and daughter inherited her mother’s IRA and named her son as beneficiary. If the daughter dies in 2020 (or some year later), can her son continue to “stretch” the IRA distributions based on his mother’s RMDs (i.e. her life expectancy) or does the SECURE Act require son to distribute IRA-BDA within 10 years starting in the year after his mother’s death?



Submitted by Alan - IRA critic on Thu, 2020-01-16 21:05

Actually, neither.  The son will be subject to the 10 year rule starting in the year following the daughter’s death, not starting in the year after mother’s death.  This Secure Act provision is titled “Exception for certain beneficiaries”.

Submitted by Steven Williams on Thu, 2020-01-23 20:05

Thank you for the response and the reference, Alan.  Very helpful!  I apolgogize if the description was confusingly written.  In this instance “his mother” is the decedant’s “daughter”.  So, the distribution period for the son will be 10 years with the clock starting in 2021 – one year after death of his mother/decedent’s daughter.  Got it.  Should have used names for clarity.  This leads me to a broader question based on the reference provided.  It look slike ANY inherited IRA that is inherited in 2020 or later would not qualify for any exception and would therefore need to be distributed within 10 years starting in the first year after the “desginated beneficiary” passes away, where the “designated beneficiary” is specfically the beneficiary named by the original account owner.  Basing this on “RULES UPON DEATH OF ELIGIBLE DESIGNATED BENEFICIARY”.  Seems straightforward and consistent with inherited IRAs not intended as estate planning/wealth transfer vehicles but am I overlooking any exceptions to this?

Submitted by Alan - IRA critic on Thu, 2020-01-23 23:57

  • Your general observation is correct about the 10 year rule applying to successor beneficiaries for designated beneficiary deaths after 2019. Note that there is no longer any benefit for a sole spousal beneficiary to default to ownership status UNLESS their beneficiary qualifies as an eligible beneficiary. Finally, for older inherited IRAs that have already been inherited a second time prior to 12/31/2019, upon the death of the successor beneficiary, the next successor (3rd beneficiary to inherit) will complete the RMD schedule of the designated (first beneficiary) instead of getting their own 10 year rule.
  • In some of these successor beneficiary 10 year rule situations, the total stretch will actually be longer than if they completed the RMD schedule of the designated beneficiary that had less than 10 years to run.

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