Reply To: Secure Act impact on decedent’s RMD?

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Alan S.

Secure does not change the responsibility for the beneficiaries to complete the year of death RMD of the decedent. If the daughters were named as beneficiaries, they are jointly responsible for completing the year of death RMD, therefore if one of them wants to take a distribution large enough to cover the year of death RMD, that will satisfy the requirement and the other need not take a distribution.

Since the disabled daughter qualifies as an “eligible beneficiary” and the other does not, it is critical for the disabled daughter to create a separate inherited IRA account no later then 12/31/2021. She will get the full life expectancy stretch, while the other daughter will be subject to the 10 year rule. The disabled daughter therefore will need to take annual beneficiary RMDs starting in 2021, while the other daughter does not have to take annual distributions, but perhaps she should to avoid having the total inherited IRA becoming taxable in year 10.

It is not clear what will happen if the separate inherited IRAs are not established by the deadline. The IRS will have to clear this up with revised Regs.