I received a call yesterday from a referral, his Uncle had passed away ten years ago and left an IRA to this 66 year old man. The man knew nothing about the IRA until a company contacted him and told him of the “lost asset”. The man did not receive the inherited IRA until this year, 2020. My thinking is this inherited IRA is subject to the New non-spouse beneficiary rules.
Am I correct?
Thank You
He will be fortunate if the IRA has not escheated to the state. In addition, if uncle passed prior to RBD it may be too late to attempt to “save the stretch” by making up each year’s late RMD, calculating each one, and filing a 5329 for each one. If the IRA is large enough, it may be worth it to pursue this per PLR 2008 11028. Otherwise, the 5 year rule will apply for death prior to RBD. Check the beneficiary provisions in the IRA agreement to see if there was a requirement to take the first LE RMD by the end of the year following death or other specific provision relating to use of the 5 year rule. For death after the RBD, beneficiary will have to reconstruct all the annual RMDs, distribute them, and file a 5329 for each year.
Permalink Submitted by David Mertz on Fri, 2020-08-14 12:24
No. The new rules under established by SEC. 401 of the SECURE Act apply to IRAs and other qualified retirement accounts inherited from decedents dying in 2020 and later. The old rules apply here since this decedent died well before that. By operation of law, this individual inherited the IRA at the moment of the decedent’s death whether he knew it or not, not on the date the IRA was moved to one titled as inherited.