Bene IRA RMD Post SECURE Act

Submitted by Andy Reynolds on Wed, 2022-08-17 20:24

Hello,

Can you please provide guidance on the 10 year rule for Bene IRAs (non-spouse and those without special provisions) inherited after the SECURE Act? Does the RMD have to be distributed within the 10 year window or does it have to be distributed annually and if annually, how is it calculated? If annually, has there been a law passed requiring this, if not, who is providing this guidance?

Thank you!



Submitted by Alan - IRA critic on Wed, 2022-08-17 20:39

  • The proposed Secure Act Regs are still pending from the IRS, but could be finalized before year end. They include several overly complex proposals that are being protested by influential retirement organizations. While this results in lack of clarity in many situations, the end result is clearer in other situations.
  • I believe you are asking about designated non spouse beneficiaries who are not EDBs and therefore subject to the 10 year rule. If the owner passed prior to their RBD, it is clear that the beneficiary will be subject to the 10 year rule without having to take out annual RMDs in years 1-9. However, if the owner passed post RBD, the IRS is proposing that the beneficiary be subject to annual RMDs in years 1-9 before draining the account in year 10. Since a Roth IRA has no RBD, no Roth 10 year rule beneficiary will be subject to annual RMD regardless of when the owner passes. They can simply wait until year 10 to drain the inherited Roth.
  • These pending Regs also have implications to successor beneficiaries that can be highly complex as requirements for the designated beneficiary may carry through to the successor. 

Add new comment

Log in or register to post comments