Inherited IRA: death of owner

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Topic Author
jefmafnl
Posts: 598
Joined: Sun Mar 25, 2007 7:11 am

Inherited IRA: death of owner

Post by jefmafnl »

I inherited an IRA (now technically a Beneficiary IRA) from my Mom this year. Due to the changes made by the SECURE Act, all funds need to be withdrawn within 10 years of the date of her death.

If I die before withdrawing all of the funds, does the 10-year clock start over again for my beneficiary, or does she have to finish the withdrawals based on the original deadline?

Thanks!

J
lakpr
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Joined: Fri Mar 18, 2011 9:59 am

Re: Inherited IRA: death of owner

Post by lakpr »

Very interesting question. Googling this led me to the following article

https://www.thomasdelpup.com/blog/inher ... mplicated/

Seems to say that, under SECURE act, the successor beneficiary must stick to the original beneficiary's 10 year clock, and no the clock does not get reset.
Alan S.
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Location: Prescott, AZ

Re: Inherited IRA: death of owner

Post by Alan S. »

That's correct.
An inherited IRA is never subject to more than one 10 year rule, so any beneficiary of a 10 year rule beneficiary must complete the term of the 10 year rule beneficiary.
TSC15
Posts: 74
Joined: Thu Oct 29, 2020 6:36 pm

Re: Inherited IRA: death of owner

Post by TSC15 »

Just for clarification, the 10-year rule starts on the year AFTER death, not the year of death. There has been some confusion when people are discussing the 10-year rule.
123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: Inherited IRA: death of owner

Post by 123 »

TSC15 wrote: Wed Aug 04, 2021 9:41 am Just for clarification, the 10-year rule starts on the year AFTER death, not the year of death. There has been some confusion when people are discussing the 10-year rule.
Good point. And it sort of makes sense (something sometimes unusual in tax regulations). Since existing law required that the deceased have taken an RMD for the year of death the 10 year period is reasonable to start the following year.
The closest helping hand is at the end of your own arm.
Topic Author
jefmafnl
Posts: 598
Joined: Sun Mar 25, 2007 7:11 am

Re: Inherited IRA: death of owner

Post by jefmafnl »

Thanks to all who replied.

In particular, thanks for pointing out that the deadline for all withdrawals is slightly later than "10 years following death."

According to IRS Pub. 590-B, on page 11

10-year rule. The 10-year rule requires the IRA bene- ficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death. For example, if the owner died in 2020, the benefi- ciary would have to fully distribute the plan by December 31, 2030. The beneficiary is allowed, but not required, to take distributions prior to that date.

J
Topic Author
jefmafnl
Posts: 598
Joined: Sun Mar 25, 2007 7:11 am

Re: Inherited IRA: death of owner

Post by jefmafnl »

PS: does anyone happen to have a citation from an IRS publication regarding the question of the 10-year clock when inheriting what was already an inherited IRA?

Thanks!

J
Alan S.
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Location: Prescott, AZ

Re: Inherited IRA: death of owner

Post by Alan S. »

jefmafnl wrote: Thu Aug 05, 2021 9:48 am PS: does anyone happen to have a citation from an IRS publication regarding the question of the 10-year clock when inheriting what was already an inherited IRA?

Thanks!

J
From IRS Pub 590 B, pages 10 and 11 - you will have to piece these together, there is no simple statement. The IRS still may need to edit this Pub somewhat to make it more understandable.
Death of a beneficiary.
In general, the beneficiaries of a
deceased beneficiary must continue to take the required
minimum distributions after the deceased beneficiary's
death. However, the beneficiaries of a deceased beneficiary don't calculate required minimum distributions using
their own life expectancies. Instead, the deceased beneficiary's remaining interest must be distributed within 10
years after the beneficiary's death, or in some cases
within 10 years after the owner's death. See 10-year rule,
later.
And for those beneficiaries already on the 10 year rule who pass, from p 11:
10-year rule.
The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments to
withdraw the entire balance of the IRA by December 31 of
the year containing the 10th anniversary of the owner’s
death. For example, if the owner died in 2020, the beneficiary would have to fully distribute the plan by December
31, 2030. The beneficiary is allowed, but not required, to
take distributions prior to that date.
The 10-year rule applies if (1) the beneficiary is an eligible designated beneficiary who elects the 10-year rule, if
the owner died before reaching his or her required beginning date; or (2) the beneficiary is a designated beneficiary who is not an eligible designated beneficiary, regardless of whether the owner died before reaching his or her
required beginning date.
For a beneficiary receiving life expectancy payments
who is either an eligible designated beneficiary or a minor
child, the 10-year rule also applies to the remaining
amounts in the IRA upon the death of the eligible designated beneficiary
Or, to cut through all the IRS-speak, here is an article from Michael Kitces:

https://www.kitces.com/blog/successor-b ... eneficary/
Topic Author
jefmafnl
Posts: 598
Joined: Sun Mar 25, 2007 7:11 am

Re: Inherited IRA: death of owner

Post by jefmafnl »

Thanks to all who replied!

J
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