Estate as Successor Beneficiary

Submitted by James Guckenberg on Mon, 2023-05-08 16:51

Original IRA owner died post-RBD and pre-Secure. Primary beneficiary took annual life expectancy distributions and then died post-SECURE without naming a beneficiary. My understanding is SECURE and the proposed regulations have not changed the distribution rule when there is no designated beneficiary. Since the original IRA owner was post-RBD, wouldn’t the successor (estate) beneficiary have annual life expectancy distributions based on the original IRA owner’s life expectancy (ghost life)?



Submitted by Alan - IRA critic on Mon, 2023-05-08 17:23

  • The successor beneficiary estate is treated the same as if the deceased designated beneficiary had named an individual successor. That is, the estate will be subject to the 10 year rule, but because the owner passed post RBD it will also have to continue theannual  RMD schedule of the deceased beneficiary in years 1-9 as if the deceased beneficiary was still living. The ghost LE does not apply here because the estate is a successor beneficiary, not the beneficiary of the IRA owner.
  • Since the estate executor will not want to keep the estate open for the duration, they would typically attempt to assign the inherited IRA out of the estate to the estate beneficiaries separate inherited IRA accounts. That would enable the estate to close, but would not affect the RMDs for the estate beneficiaries, who would be subject to the same 10 year rule and annual RMDs using the deceased beneficiary RMD schedule. And if the deceased beneficiary did not complete their RMD in the year of death, the estate or it’s beneficiaries would also be responsible for completing it.

Add new comment

Log in or register to post comments