Bene of Bene death

Submitted by Marvin Rauchbach on Mon, 2023-02-06 21:13

Trying to detm how to calculate RMDs for Beneficiary of the beneficiary. Original investor had assets in a group plan ( 403a, 403b ) and IRA. He died 10-21-2010. His d/b was 08/17/41.
Spouse inherited assets in a group plan and an IRA. She kept assets in group plan as bene account, due to state tax exemption. She died 02-19-2020. Her d/b was 01/28/40.
Children inherit assets in a group plan and in an IRA. Requesting the life expectancy factor from the vendor, i am told that 2022= 8.2, and 2023 with a subtraction of “1” = 7.2.

Is this correct?

Listening to Ed’s talk today on CPA site, did i hear that these beneficiaries of the beneficiary were able to ignore RMDs for 2021, or 2022 or not?

thank you



Submitted by Alan - IRA critic on Mon, 2023-02-06 23:47

  • For the inherited 403b accounts, because the original participant passed prior to his RBD in 2010, the annual RMDs taken by the spouse would be replaced by the 10 year rule for the children with no annual RMDs required, but the inherited plan would have to be drained by 12/31/2030. The RMD schedule of the spouse does not need to be continued after her death because the participant passed prior to RBD. Even if those RMDs were continued the vendor was off by 1.0, as the 2023 divisor would have been 8.2.
  • For the inherited IRA, it is not clear whether she assumed ownership of it or continued to take the higher RMDs as beneficiary. Please clarify.

Submitted by Marvin Rauchbach on Tue, 2023-02-07 11:53

just to confirm, since the original participant died prior to his RBD, the “at least as fast” rule does not apply.  the Beneficiaries ( children ) do not have to take any RMDs from the group 403b plan until year 10, 12/31/2030 at which time they have to withdraw the entire contents of the account. For the inherited IRA, she did assume ownership, so my guess is that annual RMDs for the children and total depletion of the account 12/31/31. one childs d/b= 05/16/63, and other is 07/04/68.  is this account under “at least as fast” for the IRA account? if so what is percent or table used for RMDsthanks so much for your help

Submitted by Alan - IRA critic on Tue, 2023-02-07 15:18

Correct for inherited 403b. For the IRA she owned and passed after RBD, the children must take annual RMDs using their respective ages in 2021. The old single life table applies in 2021, but the divisors must be reset in 2022 to reflect the new 2022 tables. The older child’s divisor would have been 27.0 in 2021, and 27.9 in 2022 and 26.9 in 2023 after resetting to the new tables. If separate inherited IRAs for each child were not established by 12/31/2021 the younger child would also use these divisors. If the separate accounts were established by the deadline the younger child’s 2021 divisor would have been 31.4, 32.4 in 2022 and 31.4 in 2023. The IRS has waived any penalty for the 2021 and 2022 RMDs in this situation but likely will not for 2023.

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