Non-Spousal Inherited IRA

Submitted by George McCabe on Tue, 2021-08-17 20:33

An individual inherited her ex-husbands IRA in 2020. She has not made a decision as to what to do as of 8/1/2021. Even if she has up to 10 years after DOD to distribute the funds, does she have to make sure that the inherited IRA account is set up by a specific date in 2021?



Submitted by Alan - IRA critic on Tue, 2021-08-17 23:23

There is no specific date, but missing RMDs means having to make them up and file a 5329 to request a penalty waiver. If she is not more than 10 years younger than ex, she qualifies as an eligible designated beneficiary for life expectancy RMDs, avoiding the 10 year rule. That would also make her 2021 RMD late if she qualifies for life expectancy RMDs and does not take the 2021 RMD by year end.

Submitted by George McCabe on Wed, 2021-08-18 02:19

Because her ex-husband died in 2020, doesn’t that mean that she will not have to take annual RMDs. Rather, wouldn’t she just need to take out the principle 10 years after the date of death at the latest? 

Submitted by Alan - IRA critic on Wed, 2021-08-18 02:29

The 10 year rule would usually apply, but beneficiaries not more than 10 years younger than the decedent are EDBs  (eligible designated beneficiaries) and qualify for the life expectancy stretch, the same as for pre Secure Act deaths. Was she less than 10 years younger?

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