Inherited IRA – twice
Hello, I have a question up for discussion and curious of others to provide feedback.
In 2010, Client passes away and leaves their IRA to non-spouse daughter. Non-spouse receives the money and starts lifetime income. Now the nonspouse who has been taking the RMD for the past 12 years, they now pass away after January 1, 2020 and leave this inherited IRA to their daughter. So the IRA has been passed down twice.
Can RMDs continue as lifetime or since this is the 2nd individual to inherit the IRA and it happen after 2020, are they now subject to fully distribute the money within 10 years.
Thank you
Permalink Submitted by Alan - IRA critic on Tue, 2022-12-06 20:20
Yes, the 10 year rule will apply to the successor beneficiary, and annual RMDs within the 10 year rule will apply IF the original IRA owner client passed on or after their RBD. If the original owner passed prior to RBD, there will be no annual RMDs but it may be beneficial to take ratable distributions anyway to prevent a tax spike in year 10. If annual RMDs will be required, the IRS has waived these RMDs for 2021 and 2022 but they would presumably begin in 2023.