Decedent or Beneficiary Single Life Table for Non-Eligible Designated IRA Beneficiary for Death after Required Beginning Date?
I’m advising a client who inherited an IRA in substantial amount from his father. He is not a minor child or disabled, etc. The father was 86 years old at death in 2021 and had been taking RMD’s.
My research is telling me that because the death occurred after the RBD and the beneficiary is a “non-eligible designated beneficiary” that the beneficiary must take RMD’s based on the owner’s (father) single life expectancy and that the account must be zero within ten years. The single life expectancy for an 86 year old according to the table is 7.6 years, which means for 2023 the divisor will be 5.6, and so the liquidation of the account will proceed be more rapidly than 10 years.
I would think this dramatic tax implication would be a fairly common circumstance I don’t see much talk about it.
Can anyone confirm or correct my understanding?
Permalink Submitted by Alan - IRA critic on Thu, 2022-12-08 16:01
No, the decedent’s life expectancy for RMDs within the 10 year rule would only be used if the beneficiary was older than the decedent. In this case the client should use his own age attained this year to determine the initial divisor from the single life table. This divisor is then reduced by 1.0 for 2023 and each year thereafter. Therefore, the inherited IRA should last the full 10 years.