By Ian Berger, JD
IRA Analyst
Question:
Under IRS rules, if I am currently receiving required minimum distributions (RMDs) and die today, my non-spouse beneficiary has 10 years to pay out my IRA. If that beneficiary dies five years later (in August 2029), does the successor beneficiary have five years to continue to pay out RMDs, or does the 10-year period restart?
Thank you,
Annmarie
Answer:
Hi Annmarie,
The SECURE Act says that your beneficiary (assuming he is not an “eligible designated beneficiary”) must empty your inherited IRA by the end of the 10th year following the year of your death. Your beneficiary must also take annual RMDs during years 1-9 of the 10-year period. If your beneficiary dies before the end of the 10 years, the successor beneficiary is subject to the same 10-year period as the original beneficiary (i.e., no restart). Annual RMDs must be continued during the remaining five years by the successor.
Question:
Hello!
We have a client with an inherited IRA subject to the 10-year rule. The client has some short-term expenses. According to the custodian, we can do a 60-day rollover back into his own traditional IRA from funds originally distributed from the inherited traditional IRA. However, I’m questioning this. Can you provide some insight?
Appreciate your time!
Matt
Answer:
Hi Matt,
It was smart of you to question this. The general rule is that a distribution from an inherited IRA may not be rolled over to the beneficiary’s own IRA. The only exception is for a surviving spouse beneficiary.