Required Minimum Distributions for a Successor Beneficiary | Ed Slott and Company, LLC

Required Minimum Distributions for a Successor Beneficiary

By Beverly DeVeny, IRA Technical Expert
Follow Me on Twitter:
@BevIRAEdSlott

Before we even get to the RMDs, what exactly is a successor beneficiary? Let’s say that Great-Uncle Scott dies and leaves his IRA to his daughter Rosemary. Rosemary is the IRA beneficiary. Rosemary names her nephew James as her “successor” beneficiary. If Rosemary dies with funds remaining in her inherited IRA, then James will succeed to her remaining benefit – he becomes the successor beneficiary.

Great-Uncle Scott calculates his RMDs using his age and the Uniform Lifetime Table. At his death, his beneficiary, Rosemary, calculates her RMDs using her life expectancy and the Single Life Table. Once her life expectancy factor is determined, she then subtracts one from that number each year to determine her current factor. If she takes only RMDs from the account, it will be totally paid out at the end of her life expectancy term. At her death before the end of that term, James succeeds to her benefit (the remaining IRA balance). He also inherits her remaining life expectancy. James does not get to use his own life expectancy. He must continue to use Rosemary’s factor and subtract one each year.

This ensures that the IRA gets paid out, and the government collects the taxes due, in a reasonable amount of time. After all, this is not James’ retirement account set up for his retirement; this account was set up for Great-Uncle Scott’s retirement.

 

Receive Ed Slott and Company Articles Straight to Your Inbox!
Enter your email address:

Delivered by FeedBurner

 


Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to matt@irahelp.com for approval.

For white papers/other outflow pieces:
Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:
Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:
Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at matt@irahelp.com or (516) 536-8282 with any questions.

 

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.
 

I agree to the terms and services:

You may review the terms and conditions here.