Inheriting an inherited IRA
Here’s the scenario…Father passed away in late 2020; he was 89 years old. His beneficiaries were his 5 children, who (at the time) ranged in age from 75 to 57. Each of the beneficiaries got their 1/5 of the IRA, designated as inherited. I get that, under the IRS ruling, they are required to take RMDs and then have inherited account emptied after 10 years.
Here’s my question…what happens if one of the beneficiaries dies in the meantime (for example, say the 75 year old was to die next year, and still has the bulk of the inherited IRA balance in the account? Would her heirs still be bound by having the account empty by 12/31/30 – or do they start the 10 year count anew?
Permalink Submitted by Alan - IRA critic on Wed, 2023-03-01 18:55
Still must be drained by 12/31/2030. Since father passed after the Secure Act became effective and therefore current beneficiaries are subject to the 10 year rule, the successor beneficiaries do not get an additional 10 years. The successor beneficiary inherited IRA must still be drained by 2030, and annual RMDs must also continue through 2029 using the same RMD schedule as being used by the current designated beneficiary. In other words, the successor will merely step into the shoes of the deceased beneficiary.
Permalink Submitted by Gregg Lynch on Wed, 2023-03-01 19:04
Thank you Alan.