In reading the language of SECURE, it seems to me that a lifetime stretch payout is optional for an eligible designated beneficiary. If they want, they could opt for the new out-in-10 payout instead, correct?
I am thinking of a hypothetical surviving spouse beneficiary who is much younger than the deceased IRA owner. I know that a SS bene doesn't have to take stretch RMDs until the decedent IRA owner would have hit their RBD. I also know that a SS bene can opt for the spousal rollover at any time.
So let's say IRA owner was 70 when they died this year. Did not hit 70.5 in 2019, so under SECURE, their RBD isn't for two more years (i.e., when they would have hit 72).
SS bene is only 52. They do not want to do spousal rollover because while they don't anticipate needing the money, they don't want a 10% penalty issue if life throws them a curve-ball and they later do, in fact, need to draw income from the account prior to 59.5. So they maintain bene status.
Now, in a stretch scenario, in two years (2022), when deceased spouse would have hit RBD, SS bene (who would then be age 54) will have to start taking stretch RMDs off Table II, correct?
Instead, could SS bene opt today (in 2020) to *not* be treated as an EDB and place themselves under the out-in-10 option, leave the account alone for nine years with no RMDs due, and then do the spousal rollover in year 10, before the 10th anniversary of death?
The SS would now be 62, the 10% penalty is moot, they avoided 5-6 years of bene RMDs (i.e., between ages 54 and 59.5) in the stretch scenario, and have no RMDs for another 10 years after that.
I recognize that this is a very specific situation, but for a SS bene who wanted to maintain bene status without having to take bene RMDs that would normally be due in a stretch scenario, I can't find a reason this wouldn't work. Am I missing something? If not, am I over-engineering it?