Successor Beneficiary to an EDB using a life expectancy payout
Greetings. I have seen some conflicting information about RMDs for successor beneficiaries, and I was hoping you could provide some clarity. I have seen both scenarios, described below, identified as correct.
In this scenario, the original IRA owner passed away in 2020 prior to his RBD. The original beneficiary was a non-spouse and was not more than 10 years younger than the original owner, so she qualifed as an EDB. The original beneficiary opted to stretch RMDs over her life expectancy rather than choose the 10-Year Rule with no RMDs. When the original beneficiary passes away, will her successor beneficiary receive a new 10-Year Rule window with no RMDs required (because the original owner passed away before his RBD), or will the successor ‘step into the shoes’ of the original beneficiary who had opted for RMDs under the stretch option with liquidation by year 10 after the original beneficiary’s passing?
Thank you,
Jon
Permalink Submitted by Alan - IRA critic on Mon, 2023-12-25 03:01
The general consensus appears to be that the successor beneficiary will be subject to the 10 year rule, but without annual RMDs in years 1-9 because the original owner passed prior to RBD. Put another way, the “at least as rapidly rule” for a successor beneficiary relates back to the original plan owner, not to the designated beneficiary.