Confirmation on Successor Beneficiary Payout

Submitted by Alexander Theodore on Wed, 2023-02-22 18:27

Was reading some successor beneficiary material and wanted to use an example to solidify my understanding of the topic: Spouse #1 inherits traditional IRA from parent. Parent passed pre-2020 and was subject to RMDs, so Spouse #1 is stretching RMDs over their life expectancy. Spouse #1 dies this year (or some point in the future). Spouse #2 (or children, nieces, nephews, etc. of Spouse #1) is listed as primary beneficiary (successor beneficiary). The successor beneficiary would be subject to the 10 year rule, with RMDs required each year using the “at least as rapidly” rule, correct? Further, if Spouse #2, the successor beneficiary, is older than Spouse #1, wouldn’t Spouse #2 use their life expectancy table since it would result in larger RMDs over the 10 year period?

Thanks in advance!



Submitted by Alan - IRA critic on Wed, 2023-02-22 19:52

  • Mostly correct, but successor beneficiaries of spouse 1 will have to continue the RMD schedule of spouse 1 in years 1-9 of their 10 year rule period. The age of these successor beneficiaries has no affect on their annual RMDs in years 1-9.
  • Now if the parent had passed prior to RBD instead of after, the proposed Secure Act rules do not appear to require the successor beneficiary to continue the LE RMD schedule of spouse 1!  In such a case, the successor beneficiary is only subject to the 10 year rule and the annual RMDs stop. The IRS apparently applies the “at least as rapidly” concept in this case to the original owner who was not taking RMDs. This is somewhat odd because the pre Secure Act Regs would have required the successsor to continue the RMD schedule of the designated beneficiary, but post Secure the 10 year rule replaces that requirement unless of course the IRS changes course again.


Submitted by Alexander Theodore on Wed, 2023-02-22 23:26

Great explanation! Thank you for the response.



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