Beneficiary of a IRA owner dies before 2020
Hi Alan! Please check 1.401(a)(9)-1(b)(Statutory effective date)(3)Examples: ii Example #2 of Final Regs (July 2024) – I’d be happy to email directly. Such an obscure detail buried in the Regs!
(happy to email but I don’t have your email; here’s mine: rosevalerie40 at yahoo com – hope this isn’t against rules to share!)
What I’m personally numbering page 19 of the long “preamble” section to these final regs clarifies even more: “…then the amendments made by section 401 of the SECURE Act do not apply with respect to the employee’s interest under the plan”.
Permalink Submitted by Alan - IRA critic on Thu, 2025-06-12 18:03
Sorry Valerie, I do not use my personal email, but can probably address your questions here.
Is the p 19 you refer to in IRB 2024-33? That has it’s own page numbers. And is the effective date of Secure for different types of plans (private in 2020, govt in 2022) the issue, or is it the applicability date of the final Regs, which is 2025, but leaves 2020-2024 in limbo where the proposed Regs could have been used OR a good faith interpretation of them?
Permalink Submitted by Valerie Hadley on Thu, 2025-06-12 19:24
No problem totally understand!
And “my bad” anyways! As I started to reply with my concern – I realized I’d misread a response you’d given to a post about a successor beneficiary.
I was just going to point out that when a sole designated beneficiary (not a spouse) dies Pre-2020, then the account is “permanently” under the OLD Inherited IRA rules (never subject to 401(a)(9)(H)) not matter how many successor beneficiaries there might be, even though they might die after 1/1/2020).
But I’m sure you know this already! (you’re extremely knowledgeable – I just thought I saw you respond to the contrary, but I’d misread your response!).
Thanks again for how helpful you are to everyone!!
Permalink Submitted by Alan - IRA critic on Thu, 2025-06-12 20:18
Yes, for a pre Secure Act death, the designated beneficiary can stretch the inherited IRA until the divisor reaches 1.0. However, once that designated beneficiary passes post Secure, the successor becomes subject to the 10 year rule while also having to continue the RMD schedule of the deceased beneficiary.
Permalink Submitted by Valerie Hadley on Fri, 2025-06-13 14:22
Agree! But if the first designated beneficiary of a pre-Secure Act death ALSO died before 2020, then all successors stay under the old rules (are never subject to 10 year rule).
(Of course they continue the original designated bene’s RMD’s though, and eventually get to 1.0 divisor.)
Exception: Pre-Secure Act, if the FIRST beneficiary is a Sole Surviving Spouse, and he/she dies before RMD’s begin – then since SS is treated as if the owner – his/her designated beneficiary is treated like the original beneficiary (and can use their own LE). Hence this Designated Beneficiary would have to also die before 2020, for the account to permanently stay under the old rules (no matter how many later successors there might be). (This in fact was the final reg rule I wanted to point out – should I post its details?)
Permalink Submitted by Alan - IRA critic on Fri, 2025-06-13 18:19
Yes, the Secure Act Regs address pre Secure beneficiaries who pass after 2020, but not when the designated beneficiary passes prior to 2020, and in that case all successor beneficiaries remain subject to the old rules, meaning that the 10 year rule would never apply, and regardless of how many successors there are, the account would have to be drained under the remaining LE of the designated beneficiary (or in some cases under the longer LE of the owner).
The applicable Reg is 1.401(a)(9)-1(b)(2)(iii), which only states that the 10 year rule will apply if the DB passes after 2019, leaving the presumption that if the DB passes prior to 2020 the Secure Act will not apply to the account.