Client died in Feb non-spouse so can bene annuitize?
My 83 year old widowed client passed away 2 weeks ago in February, she had been taking distributions for years from her qualified annuity. also, after her husband died ten years ago, her three daughters had become the beneficiaries.
It would seem that the 10-year Rule of the Secure Act applies here but I received some information from the annuity company that seems incorrect.
I planned on opening an inherited account for each and make sure the account is drained by the end of the 10th year. However, I was told that the Secure Act does not apply in this case because Mom had already been taking distributions?
The options given were for the daughters to take a lump sum, annuitize the contract or simply move to another carrier?
I may be missing something, but her daughters do annuitize, it definitely goes beyond 10 years and seems to go against the intent of the Secure Act? I would think the 10-year Rule definitely applies here.
Permalink Submitted by Alan - IRA critic on Thu, 2020-03-05 04:04
I agree with you. Things would have been different had the client annuitized the plan herself, but that didn’t happen. Interestingly, had the client rolled her inherited plan to her own IRA and passed on this same date, her beneficiary also would be subject to the 10 year rule even though they would be a designated beneficiary instead of a successor beneficiary. However, if client as the beneficiary of the current plan had passed prior to 1/1/2020, then her successor beneficiary would have been allowed to complete her original beneficiary RMD schedule.