Non-spouse beneficiaries & what RMD table applies?
Apologies for what is probably self explanatory, however I am now second guessing myself!
Two sisters (ages 52 and 53) will be inheriting IRA from mother (age 78 at the time of passing) who just passed away this year. Daughters receiving approx $300k each.
We believe they are subject to the 10 year rule (knowing that we are still waiting on proposed regs to be finalized which would require RMDs in years 1-9).
Question is what table do they use to calculate their RMDs? Do they use their own life expectancies?
Thank you for clarifying!
Permalink Submitted by Alan - IRA critic on Wed, 2022-10-26 19:04
Yes, they would use their own life expectancies based on their ages in 2023 to detemine the initial divisor. If separate accounts are established for each by 12/31/2023, the annual RMDs would be based on their respective single life table divisor. If the separate account deadline is not met, then they must both use the age of the oldest daughter. Whatever balance remains in the inherited IRAs must be fully distributed no later than 12/31/2032 per the 10 year rule. These annual RMDs would be much lower than to distribute roughly equal amounts each year, therefore they might want to consider taking more out than the RMD to prevent a large taxable distribution in 2032 that would subject them to a much higher marginal rate that year.