RMD where Estate is the beneficiary of an IRA
For a death in year 2020, RMDs are based on Secure Act.
My understanding: When an estate is the beneficiary of an IRA that under the Secure Act, it appears that the 5 year rule applies, but that there is further IRS guidance pending, ie it may be the clarification will indicate that the 5 year rule continues to apply but that maybe the RMD period will be 10 years. Is my understanding correct? And do we have any idea as to when further guidance may be released by IRS?
Thank you, Jim Magno
Permalink Submitted by Alan - IRA critic on Tue, 2021-07-27 20:00
The 5 year rule only applies if death is prior to the RBD. There have no summaries of Secure or guidance from the IRS that the 10 year rule might apply in any case where the estate is the beneficiary. If death occurred on or after the RBD, the distribution period is the remaining life expectancy of the decedent, which could be as long as 15 years.
What you may have heard is that when the beneficiary is an individual “eligible designated beneficiary”, and death occurred prior to the RBD, the beneficiary can opt out of life expectancy and into the 10 year rule, so can choose either. But this does not apply to estates. The rules for estate beneficiaries were not affected at all by the Secure Act.