RMD for Deceased IRA Owner/Their Benes Under CARES Act

Submitted by Julie Bates on Tue, 2020-04-07 13:34

Here’s some background info on a situation I’m currently working, please let me know if you have any insight.

• IRA owner dies in 2020 prior to passage of CARES Act
• IRA owner has not taken RMD for 2020
• IRA has two beneficiaries

Typically, one or both benes would be required to satisfy the deceased owner’s RMD before the end of the year. However, under the CARES act, is that still the case? Does when the IRA owner died have an impact on if they or their benes are eligible to defer their 2020 RMD? My guess would be that it doesn’t since the CARES Act applies to the year 2020 as a whole for both IRA and Inherited IRA owners, but I want to be certain.

Thanks in advance!

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Permalink Submitted by Alan - IRA critic on Tue, 2020-04-07 14:18

SInce all 2020 RMDs have been waived by CARES, in this case there is no year of death RMD that must be completed by the beneficiaries, so you are correct. However, the beneficiaries are impacted by the Secure Act, and if neither qualifies as an “eligible designated beneficiary”, they are subject to the 10 year rule. The first year of the 10 year period is 2021, and their inherited IRAs must be drained by 12/31/2030. While there are no annual beneficiary RMDs, the beneficiaries may want to determine a periodic distribution plan so they avoid getting hit with a large tax bill in 2030 if their accounts are large.