Successor beneficiary RMD
Client inherited an IRA that was an inherited IRA. Original account owner died in Jan 2015 and IRA passed to non spouse beneficiary who died in Aug 2015. IRA passed again to non spouse beneficiary. My understanding is that the RMD for the current account holder is based on the life expectancy of the first beneficiary and not their own. Is this correct?
Are there any circumstances when the RMD is calculated using the successor beneficiary’s life expectancy?
Permalink Submitted by Alan - IRA critic on Thu, 2019-12-19 04:13
Yes, it is correct that the RMD for the successor beneficiary remains the same as the correct RMD that would have applied to the first beneficiary had that beneficiary continued to live. That also includes the 5 year rule if that method applied to the first beneficiary. The only way for the successor beneficiary to use their own life expectancy would be if they were named as a contingent beneficiary and the original beneficiary disclaimed the IRA resulting in the successor then being treated as the original beneficiary.