Inheriting an Inherited IRA
Are there special rules with respect to Inheriting an Inherited IRA, post 2019? Specifically, the initial IRA holder, Ronald, died in December 2011, post RMD. His son, Scott, is the sole beneficiary, and he died in Dec 2024, post RMD. His sole beneficiary, Jill, a friend, and therefore a non-EDB, inherited this Inherited IRA in December 2024. I understand she is required to take RMD in years 1-9 and deplete the balance within 10 years, but are her RMD’s in years 1-9 based on Scott’s DOB (2nd decedent), who died in December 2024, or can they be based on Jill’s DOB?
Permalink Submitted by Alan - IRA critic on Fri, 2025-01-17 18:34
She must continue Scott’s RMD schedule, reducing the divisors that would have applied to him by 1.0 each year. If there is still a balance left in 2034 (year 10), a total distribution is required then.
Jill’s age is not a factor.
Permalink Submitted by Alan Fishman on Mon, 2025-01-20 14:05
Thanks. Is this because she inherited an Inherited IRA? In other words, had this not been an Inherited IRA that she inherited, but simply an IRA she inherited, she could base the RMDs in years 1-9 on her life expectancy. Is that right?
Permalink Submitted by Alan - IRA critic on Mon, 2025-01-20 14:18
Yes, that is correct.
There can be exceptions, such as when a designated beneficiary is older than the decedent and the decedent passed after RBD. In that case, the RMDs would be based on the decedent’s (aka ghost LE) age, and if the decedent passed after 2019, the older beneficiary would be an EDB, not subject to the 10 year rule.
But successor beneficiaries must always continue the RMDs of the deceased designated beneficiary.
Permalink Submitted by Alan Fishman on Wed, 2025-01-22 12:00
Thanks!
Permalink Submitted by Alan Fishman on Wed, 2025-01-22 13:00
One more question. Am I correct, in this example, Jill cannot name her own beneficiary? In other words, a successor beneficiary’s balance, should there be one (if she were to pass away with in the 10-year period), would be payable to her estate. Is that right?
Permalink Submitted by Alan - IRA critic on Wed, 2025-01-22 15:10
No. Any beneficiary including a successor beneficiary can name their own beneficiary to inherit the balance. But that beneficiary will be subject to the same RMD schedule as the prior beneficiary.