Second IRA Beneficiary
Here are the facts:
Father passed in 2020 and left his IRA to his son David. David passed two weeks later and the inherited IRA beneficiary is his brother Dale. Does Dale uses the 10-year rule or is he subjected to the 5 years? My understanding is as long as the beneficiary is a person they have their options are total withdrawal and 10-year rule. Does this change base on if the IRA was an inherited IRA?
I appreciate the guidance.
Eleonora
Permalink Submitted by Alan - IRA critic on Fri, 2021-11-19 19:45
In this situation, Dale is a post Secure Act successor beneficiary of a non eligible designated beneficiary. David would have been subject to the 10 year rule and Dale becomes subject to David’s same 10 year rule. There are no annual RMDs here, but the inherited IRA must be drained by 12/31/2030. In the meantime Dale can withdraw as little or as much as he wishes. If the balance is significant Dale might still want to take some distributions along the way to avoid a large taxable distribution in year 10 that might increase his marginal rate.