Inherited IRA RMD Year of Death – Eligible Designated Beneficiary
Facts:
Client’s brother died in 2022. The brother named client the 100% primary beneficiary of both his Traditional IRA and Roth IRA. Client has already rolled over the proceeds of deceased brother’s IRA and Roth IRA to a newly established Inherited Traditional IRA and Inherited Roth IRA.
The brother was 65 when he died. Client is 70.
Based on these facts, it appears the client is an eligible designated beneficiary, and because of that, it appears the client must take RMD’s on the basis of their own life expectancy over their lifetime.
Questions:
1. Is it correct that, being an eligible designated beneficiary, the client is NOT also subjected to the 10 Year Rule?
2. Because the deceased brother did not have a 2022 RMD obligation (since he had not yet reached his Required Beginning Date), is it correct that the client does NOT need to take an RMD in 2022 from his Inherited Traditional IRA and Inherited Roth IRA, and that the first RMDs won’t be required until 2023? Or is the client required to take RMDs in 2022?
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2022-12-15 18:13
Permalink Submitted by Diane Klein on Tue, 2023-01-03 21:37
So the “not more than 10 years younger” is an absolute value?? A beneficiary who is older than the decedent (within 10 years) is also considered a EDB and allowed to stretch? Also, if a EDB inherits a Roth IRA, can they elect the 10 year rule OR stretch the Roth?
Permalink Submitted by David Mertz on Tue, 2023-01-03 22:01
For example, with respect to a participant born on March 3, 1950, anyone born on or before March 3, 1960 would not be more than 10 years younger. Anyone born after March 3, 1960 would be more than 10 years younger.
Permalink Submitted by Alan - IRA critic on Tue, 2023-01-03 23:12
Such EDB for a Roth IRA could elect out of EDB treatment and into the 10 year rule because the Roth owner is treated as passing prior to RBD. It would require a few infrequent scenarios to make this beneficial.