EDB Next Named Beneficiary
We gave a client this 72 that inherited her brother’s IRA who was 75. Based on the new Secure act looks like she is an EDB and can do life expectancy RMDs. I haven’t been able to find out the answer for the next generation. If she names her husband as beneficiary of the Inherited IRA what are his options if she dies? Also, what if she just names the kids or grandkids. Would they receive 10 year payout or do they have to cash out immediately? Thanks.
Permalink Submitted by Alan - IRA critic on Tue, 2022-04-19 21:55
She is an EDB, but her successor beneficiary will be subject to the 10 year rule. Anyone she names will be a successor beneficiary subject to the 10 year rule. However, an unexpected requirement included in the proposed Regs is that whoever inherits would have to know whether her brother passed prior to his RBD or after. Since he passed after RBD, her successor beneficiary will have to take annual beneficiary RMDs within the 10 year rule in years 1-9. Those successor beneficiary annual RMDs would continue the RMD schedule client is subject to now, continuing the 1.0 divisor reduction each year. This requirement is somewhat over the top, so it may not survive the final Regs. Client will have to stay tuned toward the end of this year to see what the final Regs entail.