Beneficiary IRA – Mixing Old and New Rules
Dad died in 2016 after RBD.
IRA was split between Ken and Leigh, adult children, who began lifetime RMDs.
Ken died in 2020 (before RBD), leaving his beneficiary IRA to sister Leigh, who is less than 10 years younger.
What is Leigh’s RMD requirement?
– can she take lifetime distributions as she is less than 10 years younger than Ken
– or will she be subject to the 10 year rule for distributions
Thank you!
Permalink Submitted by Alan - IRA critic on Fri, 2022-08-26 16:39
There is no clear answer because the IRS proposed Regs are not yet final, and their proposal directly effects the need for Leigh to take an annual RMD within her 10 year rule. As a successor beneficiary her age is immaterial. If the Regs are approved as issued, Leigh would have to continue the RMD schedule used by Ken, because Dad passed after his RBD. She would have to determine Ken’s divisor for 2019, 2020 RMDs were waived, and the 2019 divisor would be reduced by 2.0 for the 2021 divisor. Again, these divisors are within the 10 year rule for years 1-9. If Ken was much older, the inherited IRA might not even last 10 years since the divisor could drop to less than 1.0 before 2030. To add to the complexity, the RMD tables changed in 2022, so Ken’s divisor would have to be rest to determine what it would have been in 2017, then 5.0 is deducted from that divisor for the 2022 RMD. Finally, because her inherited IRAs will have different divisors, they cannot be combined and the RMDs must be taken separately from her two inherited IRAs. If the final Regs are changed, and there is a decent chance of that, she might not have to take annual RMDs, just drain the account by 2030.