“My uncle (age 71) recently passed away and left his IRA to my mother, his older sister. My question is, what are the rules when the beneficiary of the inherited IRA passes away?” Here are some IRA inheritance rules that you should know.
Q.: I appreciate your columns in MarketWatch and thank you for writing them. I recently read one of your columns on inheriting IRAs and it generated a question for our family. My uncle recently passed away and left his IRA to my mother, his older sister. My question is, what are the rules when the beneficiary of the inherited IRA passes away?I’m sorry to hear of your uncle’s passing. My condolences to you and your family.
If electing to stretch, your mom would use her age as of Dec. 31 of the year after the year your uncle died and find the factor from the Single Life Table on page 20 of this document from the Federal register. She then divides the value of the account as of Dec. 31 of the year your uncle died by that factor to determine the Required Minimum Distribution. That distribution must be made by Dec. 31 of the year after the year your uncle died.
When your mom dies, whoever she named as her beneficiary on the Inherited IRA is a “successor beneficiary.” Let’s say that is you. As a successor beneficiary of an owner of an Inherited IRA that was using the stretch, you are subject to the new 10-year rule and would have to empty the account by the 10th year after the year your mom died. This is the case even if you would otherwise qualify as an EDB.
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