Twice Inherited IRA BDA
Hello,
I have a twice inherited BDA situation, the original depositor dies in 2003 at age 71. The first inheritor then dies in 2019 at 85 years old. The first inheritor took the assets as a Spousal BDA. For calculating the RMD for the successor beneficiary, would the LE be adjusted annually or reduced by 1 each year?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2025-03-26 19:58
The successor beneficiary would continue the RMD schedule of the surviving spouse but reduce the divisors by 1.0 for each year starting with 2021 (2020 RMDs were waived). The divisors would then be reset in 2022 to the new tables.
It is surprising if the SS never assumed ownership of the inherited IRA or never fell short on any beneficiary RMD, which would have resulted in a default to ownership. If that had occurred, the current successor would be a designated beneficiary rather than a successor beneficiary and would set RMDs based on their own age in 2020 (first beneficiary RMD being in 2021).
Permalink Submitted by Kevin O'Hearn on Thu, 2025-03-27 10:54
Thank you Alan. So the second owner of the IRA BDA would not have to take RMD’s because at this point the factor would be 0.0 and the IRA BDA would not be under the 10 year rule?
Permalink Submitted by Alan - IRA critic on Thu, 2025-03-27 11:18
The factor would not fall under 1.0 until 2027. If the SS recalculated (no 1.0 reduction) the divisor under the new tables would have been 8.1 in 2019 before the 1.0 reductions begin. The divisor would not fall under 1.0 until 2027. Therefore, there would have been annual beneficiary RMDs required from 2021 to 2027 and the IRA will be drained in 2027. The divisor for 2025 is 2.1.
The remaining balance will be so small after the 2026 RMD is taken that they might as well drain the account in 2026.
The 10 year rule is not a factor here because they all passed prior to 2020, and there were no RMD waivers either from 2021-2024 since those waivers only applied to 10 year rule beneficiaries.