Inheriting an Inherited IRA post Secure Act

Submitted by Ryan Smith on Thu, 2022-08-18 12:30

What are the rules of inheriting an inherited IRA? Client passed away in 2022 at age 84 with an IRA. His wife was the sole beneficiary of his IRA and chose to take it over as an inherited IRA instead of as her own. She is not in good health and is expected to pass away within the year. She has named her 5 children and beneficiaries of her inherited IRA. What are their options upon her death?



Submitted by Alan - IRA critic on Thu, 2022-08-18 14:32

What is wife’s age?  Are any of the children disabled or chronically ill?



Submitted by Ryan Smith on Thu, 2022-08-18 14:58

Wife is 84 and none of the children are disabled or chronically ill



Submitted by Jay Wiedwald on Fri, 2022-08-19 05:19

Are the children contingient beneficiaries on the decedant’s IRA? If so, the surviving spouse could disclaim the assets and the IRA would bypass her and go directly to the children. They would have much lower (if any) RMD’s and would have to drain the IRA within 10 years.



Submitted by Alan - IRA critic on Thu, 2022-08-18 20:22

  • The RMD for 2022 is that of the client, therefore if the client did not complete the RMD before passing, either the wife or wife’s beneficiaries must complete the 2022 RMD by the end of 2022. Since tax rates of these parties likely differ, a determination could be made whether wife should take the RMD now or leave that RMD to her beneficiaries. 
  • Since wife is an EDB and death of client is post RBD, the 10 year rule will apply to her beneficiaries. The inherited IRA or separate inherited IRAs for each beneficiary will have to be drained by the end of 2032. Beyond that requirement, the outcome of the proposed IRS Secure Act Regs come into play, including some provisions that are being contested by major retirement organizations for being overly complex and confusing. The proposal would require annual RMDs within the 10 year rule using the remaining non recalculated LE of the wife since the children are successor beneficiaries. That would drain the IRA in about 8 years instead of 10. However, if this portion of the proposal is not adopted, then the children would receive the 10 year rule without annual RMDs.
  • On the other hand, if the wife were to elect to assume ownership of her inherited IRA, then the children would not be successor beneficiaries, they would be non EDB designated beneficiaries and if they were also required per the proposal to take annual RMDs, those RMDs would be based on their own life expectancies, not that of the wife. Their inherited IRAs would last the full 10 years of the 10 year rule, with annual RMDs if required smaller than those required if they were successor beneficiaries. 
  • If wife were to survive 2022, assumption of ownership would also greatly reduce her 2023 RMD as owner compared to that of beneficiary.


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