Successor Beneficiaries
Owner A passed away on 06-08-2018
Owner A was born on 10-10-1967
Owner A’s IRAs were Inherited by:
- Beneficiary B (Father) – DOD 02-10-2024
- Beneficiary C (Mother) – DOD 12-31-2023
Upon the passing of Beneficiary B and Beneficiary C, Owner A’s IRAs were then Inherited by her siblings:
- Successor Beneficiary D
- Successor Beneficiary E
- Successor Beneficiary F
- Successor Beneficiary G
A. What is the annual RMD treatment?
B. How are the annual RMDs calculated?
C. How soon do the inherited IRAs need to be emptied?
Permalink Submitted by Alan - IRA critic on Wed, 2025-01-15 19:26
Did B and C both inherit the same IRAs, and did they create separate inherited IRA accounts by the end of 2019? Were both parents named on each of A’s IRAs, or did some of those have different parent’s as the beneficiary?
These facts matter because the successors must continue the RMD schedule of the primary beneficiaries, so would need to know the year both parents were born. The 10 year rule will also apply, and if there is still a balance in year 10, the inherited IRA would need to be drained then.
It would be much simpler if there was only one primary beneficiary, but here there are two primary beneficiaries and passed in different years.
Permalink Submitted by George McCabe on Thu, 2025-01-16 16:21
The original owner had 1 IRA and that IRA was split up 50/50 between each of her parents.
Permalink Submitted by Alan - IRA critic on Thu, 2025-01-16 17:53
Ok. Then if each parent created a separate inherited IRA account by 12/31/2019, that parent’s separate IRA would be subject to annual beneficiary RMDs based on that parent’s age in 2019. That parents RMD schedule (divisors) would have to continue each year until year 10 of the 10 year rule. The divisors will differ if parents were born in different years. That said, the IRS waived these beneficiary RMDs for years 2021-2024, but they must resume in 2025.
Year 10 for mother’s IRA would be 2033, for father’s IRA 2034.
If the parents were in their late 70s or older when they inherited in 2018, these inherited IRAs will be drained by the annual RMDs before they reach year 10.
Finally, if the RMD divisors differ, the 4 successor beneficiaries cannot combine the inherited IRAs from each parent. They will each have to maintain 2 inherited IRAs each.