Successor Inherited IRA
This is a new one for me. Client’s brother passed away in 2014 at age of 48, mother inherited the Trad IRA. Mother passed away in 2020 at the age of 85, year of birth 1935. Based on the new 2022 LE table, I calculated the mother’s LE in 2015 at age 80 to be 11.2. Now since the client inherited the ‘inherited’ IRA, he is subject to the 10 year rule and must step into his mother’s shoes for the LE, which would be 2.2 (11.2 – 9) in 2024. If this is true, then the inherited IRA must be depleted by 12/31/2026 because the LE is 2025 will be 1.2 and under 1 in 2026. Is this correct based on your understanding of the SECURE Act rules confirmed this summer?
Permalink Submitted by Alan - IRA critic on Thu, 2024-09-05 12:08
All correct. Total distribution will be required in 2026, so the 10 year deadline will not be a factor.
In addition, Notice 2024-35 and prior Notices with respect to 10 year rule beneficiaries waiving annual RMDs for 2021-2024 also applies to successor beneficiaries. As such, the client was not required to take an RMD in those years but will have to resume beneficiary RMDs in 2025. Therefore, the client still has a choice with respect to taking a 2024 distribution or leaving a larger balance for 2025 and 2026.
Permalink Submitted by John Hill on Thu, 2024-09-05 13:04
Thank you sir