Client is inheriting a BDA from her mom
My client is inheriting a BDA from her mom. Her mom inherited it from her husband but did not take a spousal rollover and instead took it as a BDA. She was not under the 10 year rule. Now my client in inheriting that BDA so is she under the 10 year rule or the old rule that her mother was on? Thanks in advance for your help!
Permalink Submitted by Alan - IRA critic on Fri, 2025-05-30 17:41
Client will be subject to the 10 year rule. Other than that, a complex set up variables exist that may require some research.
Mom would have defaulted to ownership of the inherited IRA if she failed to take the full RMD for any year. If that occurred client would be a designated beneficiary still subject to the 10 year rule, but if Mom passed prior to RBD, there would be no annual RMDs required in years 1-9. If Mom defaulted to ownership and passed after RBD, client would have to take beneficiary RMDs in years 1-9 based on their own age. Default to ownership is not that rare, but many are unaware of this rule. Similarly, if Mom passed prior to the end of the year that the first beneficiary RMD was required, Mom will also be treated as the owner and the client as a designated beneficiary.
On the other hand, if Mom was subject to RMDs and took all her RMDs except the year of death RMD, the IRA is actually a BDA, and the client must continue Mom’s RMD schedule as a successor beneficiary. Client must also complete Mom’s year of death RMD if she did not do so.