EDB for Beneficary IRA

Submitted by Michael S on Mon, 2022-11-28 21:42

Client passed away at age 59. Ex wife, was beneficiary of 401(k). Ex wife now has beneficiary IRA. Ex wife was 56, so falls in the category of being an Eligible Designated Beneficiary. Question: can ex wife’s account become her own IRA, or does it need to stay in the Beneficiary IRA form? Considering she does not have to take distributions until her RMD age of 72, I was wondering if the account could be transferred into her name only.



Submitted by Alan - IRA critic on Mon, 2022-11-28 22:30

If they were divorced at the time of client’s death, she is treated like any other non spouse beneficiary. She cannot do a spousal rollover to her own IRA.  If client passed prior to 2021, please advise.

Submitted by Michael S on Tue, 2022-11-29 00:21

Client passed away in 2021.  ex wife has the beneficiary Ira.  she does not have to take RMD until age 72, correct?  Considering she is a non spouse beneficiary, however, she is an EDB because her age is within 10 years of the client who passed.  Just want clarification…  thank you!

Submitted by Alan - IRA critic on Tue, 2022-11-29 00:44

  • Age 72 is when RMDs begin for owners or for spouse beneficiaries if deceased spouse would not yet have reached 72. The ex does not fall into either of these situations. She must start beneficiary RMDs by the end of 2022, and each year thereafter. The divisor is reduced by 1.0 for each year after 2022. These RMDs must be taken every year.
  • While this would not likely be a good choice, she also does have the option of opting out of EDB treatment and into the 10 year rule. No annual RMDs would be required, but she would have to drain the inherited IRA by 2031. This would only be a wise choice if there were very unusual cirumstances regarding her financial and tax situation during these years.

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