IRA
Sandy (61) inherited an IRA from her brother (65) that was originally inherited from their dad, which was pre-2020. Being that she is inside of 10 years age difference from her brother, this should allow her to continue the RMD’s originally set forth from the pre-secure act rules on the inherited IRA.
Questions…
Is the above correct? Will she be allowed to continue the RMD or still be subject to 10 yr rule for withdrawals.
If she is allowed to continue RMDs, will this be based on her age or the brother as the original beneficiary
When dad passed away, the IRA was split between Sandy and her brother. Now that the brother has passed and Sandy has inherited the remainder of Dad’s IRA, can she combine the IRAs again since the original source was Dad? Our assumption is that they will have to stay segregated.
Adding one more question..
Sandy also inherited an IRA as primary beneficiary from her brother. With the age difference being less than 10 years, will she be allowed to stretch the IRA or be subject to 10 yr w/d rule?
Permalink Submitted by Alan - IRA critic on Fri, 2021-10-08 14:28
The Secure Act applies the 10 year rule to successor beneficiaries of desigated beneficiaries. The age of the successor beneficiary in relation to the designated beneficiary has no bearing on this because the successor cannot be treated as a designated beneficiary. Therefore, Sandy will be subject to a new 10 year rule.
Her inherited IRAs must remain separate since they are subject to different RMDs. She remains the designated beneficiary on the inherited IRA inherited directly from Dad.
The IRA she inherited directly from brother can be stretched because she is an eligible designated beneficiary (EDB). This IRA must also be kept separate as it was inherited from a different original decedent and her RMD divisors also differ from the others.
Am assuming brother passed in 2021. New RMD tables take effect in 2022, and will apply for RMDs other than the 10 year rule account. The IRA inherited directly from Dad will have the divisors reset due to the change in RMD tables next year. The new tables will slightly reduce her RMDs compared to present tables.