Inherited RMD for non spousal beneficiary
I have a client who inherited an IRA (non spousal) and the deceased was taking RMDs even though she was younger than her RBD. She died in January of 2021 at age 70 and had not taken any 2021 RMD. Two questions:
1. Is there a RMD needed for 2021 and does the inherited bene take it?
2. Does the 10 year distribution period apply to the inherited bene or is there a different distribution schedule?
Thanks.
Permalink Submitted by William Tuttle on Mon, 2021-12-20 14:55
If the deceased’s IRA was not an Inherited IRA, these were simply distributions not RMDs.
Not if death before RBD
Depends on age and circumstances of the non-spouse beneficiary. I’ll let Alan give the more complete correct response.
Permalink Submitted by Jeffrey Harris on Mon, 2021-12-20 15:07
Thanks. Non spousal inherited bene is 63 years old. Deceased was 70 at DOD.
Permalink Submitted by Alan - IRA critic on Mon, 2021-12-20 16:20
Since the beneficiary is not more than 10 years younger than the IRA owner, the beneficiary is an EDB (eligible designated beneficiary). The beneficiary therefore qualifies for life expectancy RMDs with the first beneficiary RMD not due until 12/31/2022 and based on beneficiary’s attained age in 2022.
But because the owner passed prior to RBD, the beneficiary could opt out of LE and into the 10 year rule if they wanted to. That would not be beneficial in most cases, but certain unique fact patterns could make this beneficial for some. The beneficiary should make this decision no later than 12/31/2022 unless future IRS Regs state otherwise.
Permalink Submitted by Jeffrey Harris on Mon, 2021-12-20 17:18
Really helpful. Many thanks!