IRA Beneficiary question
Hello, I have a client who passed away in 2016 and left their 2 children. The children have been taking their RMD’s annual based on their own life expectancy (there is a one year in age difference.) in 2021 one of the children passed away and left their IRA BDA to the remaining sibling. Since the IRA BDA’s were funded by the same original depositor wouldn’t the remaining IRA BDA owner could their IRA BDA with the IRA BDA for the sibling who passed away in 2021?
My thinking is that a new IRA BDA should be opened and created because it will follow the new Secure Act rules whine the IRA BDA’s opened in 2016 would follow the pre-Secure Act rules.
Any feedback would be greatly appreciated. Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2022-05-16 19:48
Yes, the IRA accounts must continue to be separate because the 10 year rule will now become effective for the successor beneficiary inherited IRA, and that inherited IRA must also be titled differently. Further, to add to the complexity, it must be determined if the original owner passed pre or post RBD in 2016. If they passed after their RBD, the proposed Secure Act regs will require the annual RMDs to be continued within the 10 year rule. That said, this proposed requirement is controversial and may not be included in the final Regs. If the original owner pased prior to RBD, then there will be no annual RMDs starting in 2022. The beneficiary IRA without a successor beneficiary continues unaffected. Again, these two inherited IRAs should not be combined.