Updating the Beneficiary RMD Cheat Sheet
In the May 8, 2024, Slott Report, was published a “cheat sheet” summarizing the confusing SECURE Act rules for beneficiary IRA (and company plan account) required minimum distributions (RMDs). At that time, the IRS had not yet published final RMD regulations, so a number of questions remained. Since those regulations have been issued, it was time to update the cheat sheet. Keep in mind that these are the rules for IRAs inherited after 2019. (Pre-SECURE Act rules apply for IRAs inherited before 2020.)
Two Important Questions
As before, we first need to answer two important questions:
- Did the IRA owner die before or after his required beginning date (RBD) for RMDs? The RBD is April 1 of the year following the year the IRA owner reaches his first RMD year. (The first RMD year is age 73 under SECURE 2.0.) A Roth IRA owner is always considered to have died before his RBD.
- Is the IRA beneficiary an eligible designated beneficiary (EDB), a non-eligible designated beneficiary (NEDB) or a non-designated beneficiary (NDB)? An EDB is a surviving spouse of the IRA owner; a minor child (under age 21) of the IRA owner; a chronically-ill or disabled person; or someone not more than 10 years younger than the IRA owner. An NEDB is an individual beneficiary who is not an EDB. An NDB is a beneficiary who is not a person (e.g., an estate, a charity or trusts that do not satisfy the “see-through” rules).
Traditional IRA Owner Died Before RBD OR Roth IRA Owner Died at Any Time
EDB (other than a minor child): An EDB other than a minor child can (1) stretch RMDs over her life expectancy; or, if available, (2) have the 10-year payment rule apply. If the 10-year rule is elected (or required), the inherited account must be emptied by 12/31 of the 10th year following the year of death. However, no annual RMDs are required during the 10-year period. A surviving spouse EDB can also do a rollover to her own IRA (usually not recommended until age 59½).
EDB (minor child): A minor child EDB can (1) stretch RMDs until the year he turns age 30 and then empty the inherited account by the end of the year he turns age 31; or, if available, (2) have the 10-year payment rule apply. If the 10-year rule is elected (or required), the inherited account must be emptied by 12/31 of the 10th year following the year of death, but no annual RMDs are required.
NEDB: The 10-year rule applies, but no annual RMDs are required.
NDB: The 5-year rule applies. The entire account must be emptied by 12/31 of the 5th year following the year of death, but no annual RMDs are required during the 5-year period.
Traditional IRA Owner Died On or After RBD
EDB (other than a minor child): Stretch RMDs apply. However, if the EDB is older than the deceased IRA owner, the EDB can use the deceased person’s longer life expectancy in calculating RMDs. A surviving spouse EDB can also do a rollover to her own IRA (usually not recommended until age 59½).
EDB (minor child): A minor child EDB can stretch RMDs until the year he turns age 30 and must empty the inherited account by the end of the year he turns age 31.
NEDB: Both the 10-year rule applies and annual RMDs during the 10-year period are required. (The IRS waived the annual RMD requirement for years 2021, 2022, 2023 and 2024 in this situation.)
NDB: Annual RMDs must continue over the deceased IRA owner’s remaining single life expectancy had he lived (the “ghost rule”).
By Ian Berger, JD
IRA Analyst
Ed Slott and Company, LLC
Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.