ALAR Piece by Andy Ives

Submitted by Bob Foland on Wed, 2023-07-05 22:19

In the piece you wrote today about the ALAR, I guess I would have miscalculated Martha’s (Abe’s daughter in your example) RMD. Using the uniform lifetime table, Abe’s RMD would have been about 5% of his 12/31 value. Using the single life table for Martha, the RMD would be about 3.25%.

I would have advised Martha to continue her father’s RMD schedule. My thinking is that that is what ALAR refers to. Please set me straight.



Submitted by Alan - IRA critic on Wed, 2023-07-05 23:31

  • You are referring to Andy’s 6/5 piece, not 7/5. His main point is that ALAR refers to having to take beneficiary RMDs or not, and not to the amount of those RMDs. Therefore, while Martha must take annual beneficiary RMDs, there are based on her single life expectancy, not on the the age of her father. In the case of a child beneficiary, their lower age overcomes the higher RMD %s of the single life table over the Uniform Table for the same age.
  • Another variation of ALAR applies to older beneficiaries than the owner when the owner passes post RBD, and older beneficiaries are always EDBs. For example, if the IRA is left to an older sibling, the sibling is allowed to use the longer LE of the deceased owner rather than their own LE. This reduces RMDs for awhile, but only until the RMD based on the older beneficiary would have had to drain the inherited IRA, at which point the older beneficiary must still drain the IRA. This provision adds the unwelcome complexity for the beneficiary to have to track two different ages from the single life table to determine when the inherited IRA must be drained.

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