Eligible Designated Beneficiary (Parent)
So parents of deceased adult children would always be eligible designated beneficiaries because of the “Not More Than 10 Years Younger Than the Decedent” category, correct?
I just had a client (age 54) pass away and his mother was the bene (Age 80). She would be an EDB and would have the option to draw down her inherited IRA based on her life expectancy, right?
I guess in her example it may not look much different then spending the inherited IRA down over 10 years because of her advanced age.
Permalink Submitted by Alan - IRA critic on Thu, 2023-03-30 16:12
Yes, you are correct regarding parent’s EDB status. Parent also has the option of opting out of EDB status and into the 10 year rule, with no annual RMDs required in years 1-9. The option should be communicated to the inherited IRA custodian no later than 12/31/2024 when the first LE RMD would otherwise be due as an EDB. Opting out of EDB treatment is unwise except in limited circumstances (eg, parent is in poor health and unlikely to survive 10 years, and in a high tax bracket, and will name a charity as successor beneficiary). This decision would reduce beneficiary taxes and preserve more funds for the charity. If something changes, parent can still take distributions, but they are not RMDs until year 10.