Inherited IRA post secure act

Submitted by ShipsnGiggles on Tue, 2020-02-25 20:11

T-IRA owner dies in 2020
Two beneficiaries – one is an eligible designated beneficiary and the other is a nonspouse beneficiary

The EDB can stretch based off their life expectancy whereas the non-NEDB is subject to the 10 year rule

Do the inherited account still need to be “split” by the end of the year following death? In order for each beneficiary to receive their own pay out timeframe
Do the inherited accounts still need to be “split on “by the end of the year following death? In order for each beneficiary to receive your own payout timeframe?

if splitting is required – what happens if the accounts are not split in a timely fashion?



Submitted by Tracy DeCrosta on Tue, 2020-02-25 21:09

My brother passed away at age 47, my mother (72 at his passing in 2006) was his beneficiary.  Could she have established an inherited IRA?  My brother would not have been 72 until 2031.

Submitted by Alan - IRA critic on Wed, 2020-02-26 01:23

She could have and should have. What has been done with this account, or has it been escheated to the state by now?  If mother is able to submit his death certificate and other data and establish an inherited IRA, it will have to be immediately distributed to her under the 5 year rule, and then she would have to file a 5329 requesting waiver of the penalty for failing to distribute the account under RMD rules. 

Submitted by Alan - IRA critic on Wed, 2020-02-26 01:12

  • Dr KnickRiv – Secure does not change the separate account rules, so it is clear that an EDB should be sure to create a separate inherited IRA by the deadline to lock in their LE stretch. If they fail, the result is not real clear and the financial press has ignored the multiple beneficiary situation in favor of how trusts are affected. For example, if no separate account is created for the EDB, what happens if the other beneficiary is just a DB?  The IRS will have to modify current Regs which indicate the age of the oldest will apply. While this could reduce the stretch for the EDB if the EDB is younger, I don’t see the IRS allowing the non EDB to exceed the 10 year rule. On the other hand under current Regs, if an EDB is left with a charitable beneficiary not paid off in time, the EDB will clearly be treated as a non DB. Until we get full clarification, EDBs needs to be particularly aware of the deadline to establish separate accounts.

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