Pension payout option is fixed payments for 20 years, is this exempt from Secure Act 10-year rule?
Hi,
One of my pension payout options is 240 fixed monthly installments, another option is 20 year certain +Life Annuity. Do either of these options allow my contingent beneficiaries (my children) to be exempt from the Secure Act 10-year payout rules if I, and then my spouse (as primary beneficiary), were to pass prior to receiving all payments? I understand the Secure Act forces IRA or 401k/403b to be drained within 10 years for inheriting children but I was unsure if pension payouts are treated similarly or not.
Second question, these payments over 20 years, are they taxed as ordinary income to whomever receives them (either myself, or my primary beneficiary spouse, or my contingent beneficiaries my children) over the 20 year period?
thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2023-01-30 20:39
DB plans will be subject to the 10 year rule for beneficiaries unless an irrevocable election (generally the start of annuity payments) was made prior to 12/20/2019. All distributions are taxed at the ordinary income rates regardless of who receives them.