Post Secure Act non-spouse Designated Beneficiary is older than decedent
Hello,
Currently working with an office needed some guidance on the RMD distributions for their client. The decedent was born on 5/11/1943 and passed 10/22/2023. The client date of birth is 4/26/1934. The client is a non-spouse Designated beneficiary would follow the Secure Act 2.0 finalized regulations with the life expectancy payments for years 1-9 then deplete account in 2033.
The office thought the RMD would be based on date of birth of the client. If the RMD was calculated this year based on the client’s date of birth, it would be $51,383.91 with a 12/31 balance of $292,888.30 and factor of 5.70.
Since, the client is older than the decedent, wouldn’t the RMD be based on the decedent’s life expectancy? If the RMD was calculated for 2024, then the RMD would be $28,714.54 with 12/31 balance of $292,888.30 and factor of 10.2.
Please advise the guidelines for a non-spouse Designated Beneficiary post secure act decedent older than RBD age would follow the “Owner’s life expectancy” rule in IRS.gov.
Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2024-10-21 20:33
You are correct. The office is not.
Because decedent passed after RBD and the client is an EDB, client can stretch the IRA over the remaining LE of the decedent rather than being subject to the 10 year rule. 10.2 is the correct divisor for 2024, and reduces by 1.0 for each year thereafter, allowing the inherited IRA to last for 11 years.
Client must also complete the decedent year of death RMD if decedent did not do so before passing. The deadline for that is 12/31/2024.