Inherited IRA
Double checking on this. Entered it a while back, but didn’t see an answer at the time and there is no search function.
A client inherited an IRA from his sister back in 2015.
He died 2/8, and his wife is the new beneficiary.
Does she have to continue to take RMD’s based on her late husband’s formula or does she get 10 years?
We will take the 2022 RMD based on her husband’s formula for 2022 as soon as the account transfers over.
Thank you
Permalink Submitted by Alan - IRA critic on Tue, 2022-03-01 20:11
She gets the 10 year rule, meaning no annual RMDs but inherited IRA must be drained by 12/31/2032.
Permalink Submitted by Dan Zaehring on Tue, 2022-03-01 22:03
Not to confuse the issue, but the recent post from the Slot Report states, “The IRS has taken a somewhat surprising position on the new 10-year rule imposed by the SECURE Act. However, the new regulations say that if the IRA owner dies after her required beginning date, then not only does the 10-year rule apply, but also annual RMDs are required in years one through nine.”I know these are only “proposed”, but unless significant negative feedback is received, they may well become final.
Permalink Submitted by Alan - IRA critic on Tue, 2022-03-01 23:29
Yes, this is the 3rd differing IRS interpretation of the Secure Act on this issue. There are other unexpected interpretations included in the 275 page proposal that might get significant blowback. Until this becomes an official requirement I suggest no one take more out of an inherited IRA than they wish to, since such distributions cannot be rolled back.
Permalink Submitted by Jessi Howe on Wed, 2022-03-02 01:12
I have a pre-SECURE act Successor Beneficiary client (in other word, both the original IRA owner and the initial beneficiary died prior to January 1, 2020). Does the successor beneficiary get to use the new single life table to calculate her required distributions based on the previous beneficiary’s updated life expectancy? Thanks in advance.Jessi
Permalink Submitted by Alan - IRA critic on Wed, 2022-03-02 02:06
Yes, all beneficiaries including successor beneficiaries should properly reset their RMD divisors to reflect the new tables starting in 2022.