Non-eligible designated beneficary disclaims. Contingent is EDB. Stretch available?

Suppose my brother, who is 13 years younger than me is named a sole primary beneficiary on my IRA. My sister, who is two years younger than me, is sole contingent.

I die, and my brother disclaims a week later. Does my sister have the option of a lifetime stretch?

Looking at the language of SECURE, it says that EDB status is determined “as of the date of death” of the participant/owner.

If my brother disclaims, and my sister “steps up,” is she retroactively treated as having been the primary bene on the date of my death and thus able to qualify as an EDB?

Or is DoD a true snapshot of that point in time, whereby the only bene “in play” on my date of death – the date that eligible designated beneficiary status is determined – was my non-eligible brother? My sister had no beneficiary rights on that date.



With the disclaimer, your brother is treated as pre deceasing your sister, and she inherits as an EDB. Her age difference from you is clearly ascertainable, however assume she is > 10 years younger, but disabled or chronically ill. If she knew brother was going to disclaim, she should proceed to establish that she was disabled or chronically ill as of your DOD, and that determination might be subjective without clear evidence.



You bring up another point that I was thinking about earlier today.  As EDB status is determined at the date of the participant’s death, if a non-EDB starts the out-in-10 payout but becomes disabled or chronically ill, say, the very next year, they apparently cannot retroactively qualify as an EDB and thus cannot flip to a lifetime stretch payout.  They are stuck with out-in-10. I wonder if that was intentional or inadvertant on the part of the drafters of the Act.



I agree, and it was probably intentional.



Seems odd that they’d jump through the hoops to help out disabled/chronically-ill heirs with that special rule for trusts, but not be interested in helping heirs who may have become disabled as soon as one day after the IRA owner died.



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