Inherited IRA – Definition of Required Beginning Date

Submitted by Charles Kauffman on Thu, 2022-08-11 22:33

If someone (non-spouse, non-estate) inherits an IRA two months after turning 72 years old, is the stretch option available? This depends on the definition of required beginning date. Some say the required beginning date is the day in which the original IRA owner turned 72, others say the required beginning date is April 1 in the year after you turn 72.

My reading of section 401(a)(9)(C)(i) is that the required beginning date is April 1 following the year the holder turned 72.

This means (if I am understanding correctly) if someone inherited the IRA after the holder attained 72, but before the required beginning date, then the stretch option is available, however a RMD needs to be taken by April 1 of the year following death.

Is anyone else finding the Required Beginning Date language confusing?



Submitted by Alan - IRA critic on Thu, 2022-08-11 23:47

  • The RBD technically only applies to plan owners, not to beneficiaries with the exception that the RMD requirements for beneficiaries depend on whether the owner passed prior to or (on or after) the RBD. Anytime an owner passed prior to RBD, there is no year of death RMD required of the beneficiary.
  • To your question, the RBD is never the date that the owner reaches 72, it is 4/1 of the year following the year they reach 72.
  • Assume a case where owner reaches 72 in Feb, 2022. The RBD is 4/1/2023, 14 months later. If the owner passes anytime in 2022 or even in Jan-March of 2023, they passed prior to their RBD. There is no year of death RMD for the beneficiary to worry about. Even if owner passed on 3/31/2023, they passed prior to RBD, and the beneficiary does not have to worry about either a 2022 or 2023 RMD of the owner.
  • Moving on to the beneficiary’s own RMDs, they never begin until the year after the owner’s death. In the above example, if the owner passes in 2022, the first beneficiary RMD due is 12/31/2023 if life expectancy RMDs apply. Special rules apply to a sole surviving spouse beneficiary. If that owner passes on 3/31/2023 or earlier in 2023, the first beneficiary RMD is not due until 12/31/2024.  Again, the 12/31/2024 deadline is NOT considered an RBD because beneficiaries do not have their own RBDs, is is just a plain old deadline for the first beneficiary RMD. If any beneficiary RMD is due for a year, it is always due 12/31 of that year.
  • When a beneficiary is responsible for making up the OWNER’s year of death RMD when the owner passes after their RBD, the beneficiary should complete the owner’s RMD by 12/31 of the year of death. That said, if the beneficiary fails to do so because the decedent passed late in the year, the new proposed Regs indicate that their will be no penalty if that beneficiary completes the prior year of death RMD by their tax due date plus extensions. 

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