SECURE Act Beneficiary obligation beyond 10 yrs.
The SECURE Act calls for non-spouse beneficiaries to withdraw all the IRA funds in 10 years from date of benefactor’s death. But I am leaving my adult daughter a plan that pays monthly for 18 years after I pass. How can she withdraw and pay taxes on the 8 year overhang when she hasn’t even received the money yet. Anybody know?
Permalink Submitted by Alan - IRA critic on Sat, 2020-05-23 16:24
Please expand on what you mean by “a plan”. Is a trust for her benefit the IRA beneficiary? Is it an SNT (special needs trust)?
Permalink Submitted by Jay S on Sat, 2020-05-23 18:02
I’ve purchased the remaining years and months of someone’s annuity on the secondary market. No trust involved, payments are straight to her. Not special needs. She’s a healthy 46 year old. I’m 76.
Permalink Submitted by Alan - IRA critic on Sat, 2020-05-23 19:22
If the annuity was issued by an insurance company prior to 12/20/2019, it is exempt from the Secure Act, but if you purchased it after that date, that might affect the exemption. Accordingly, it should be exempt from the 10 year rule and fall under the pre Secure RMD provisions, but both you and daughter (when inherited) will have annual RMD requirements. Currently, 2020 RMDs are waived, but for other years it appears that the 18 year period does not exceed your Uniform Table life expectancy.
Permalink Submitted by Jay S on Sat, 2020-05-23 22:02
Yours is the first answer I’ve received other than, “call the IRS.” Well, we did and they didn’t know either. Just sent some obsolete pre-SECURE guidance. Thanks much!