Hello-
Mother-in-law dies in 2017 after beginning RMDs from a Traditional IRA. The son (age 61 at the time) is the sole beneficiary.
The son dies in 2018 with his wife (age 59 at the time) as the sole beneficiary of the Inherited Traditional IRA.
In the current year, my understanding is the wife takes RMDs using Table 1 factors based on what her husband’s age would have been at the birthday in the current year. Does that sound accurate?
Thank you!
Since the beneficiary died prior to 2020 and SECURE, then the successor would simply continue at the rate of the beneficiary, subtracting 1 from each subsequent year’s life expectancy originally taken from Table I. But had the death of the beneficiary been in 2020, the successor would then have to use the new 10 year rule….correct?Thanks
Yes, the 10 year rule would apply if the designated beneficiary passed after 2019. In that case, the Secure Act treats the designated beneficiary as an EDB, and the 10 year rule kicks in upon the death of an EDB. Following is the applicable Secure Act provision.
“5) EXCEPTION FOR CERTAIN BENEFICIARIES.— (A) IN GENERAL.—If an employee dies before the effective date, then, in applying the amendments made by this section to such employee’s designated beneficiary who dies after such date— (i) such amendments shall apply to any beneficiary of such designated beneficiary; and (ii) the designated beneficiary shall be treated as an eligible designated beneficiary for purposes of applying section 401(a)(9)(H)(ii) of the Internal Revenue Code of 1986 (as in effect after such amendments). (B) EFFECTIVE DATE.—For purposes of this paragraph, the term ‘‘effective date’’ means the first day of the first calendar year to which the amendments made by this section apply to a plan with respect to employees dying on or after such date.”
The above does not apply to this case because the designated beneficiary passed prior to Secure, not after it’s effective date. Therefore, the prior RMD rules continue to apply to that inherited IRA.
Permalink Submitted by Alan - IRA critic on Thu, 2021-04-29 20:14
Not quite correct. Her RMD divisors will be what the son’s would have been had he lived. There were no 2020 RMDs, but the 2021 divisor will be 3.0 less than what the son should have used for his first beneficiary RMD in 2019. RMD divisors will continue to be reduced by 1.0, but since the tables are changing in 2022, the divisors will have to be reset starting in 2022. You can look into that process next year, as it does not affect the 2021 beneficiary RMD.