IRA IRA Beneficiary Rules and Inherited IRAs 2

Question 1

What is a 'disclaimer' in the context of inherited IRAs?

Accepted Answer

A legal refusal of an inherited IRA that allows the assets to pass to the next beneficiary in line

Answer

A qualified disclaimer allows a named beneficiary to refuse the inheritance within nine months, passing the account to the next beneficiary, which can be useful for estate planning.

Question 2

Under current IRS guidance, must non-spouse beneficiaries subject to the 10-year rule take annual RMDs during the 10-year period if the original owner died after their RBD?

Accepted Answer

Yes, annual RMDs are required during the 10-year period, with the remaining balance distributed by year 10

Answer

IRS proposed regulations clarify that if the original owner died after their required beginning date, non-spouse beneficiaries must take annual RMDs during the 10-year period based on the beneficiary's life expectancy.

Question 3

A minor child of the IRA owner inherits an IRA. Under the SECURE Act, what rules apply?

Accepted Answer

They use the lifetime stretch until majority, then the 10-year rule kicks in

Answer

Minor children of the IRA owner are EDBs and can use the lifetime stretch until they reach the age of majority, after which the 10-year rule applies.

Question 4

What is a 'see-through trust' in the context of IRA beneficiary designations?

Accepted Answer

A trust that meets IRS requirements so that individual trust beneficiaries are treated as designated beneficiaries for distribution purposes

Answer

A see-through (or look-through) trust allows the trust to be treated as a designated beneficiary if it meets specific IRS requirements, including that all beneficiaries are identifiable individuals.

Question 5

Can a beneficiary of an inherited IRA make new contributions to the inherited account?

Accepted Answer

No, beneficiaries cannot make new contributions to an inherited IRA

Answer

No contributions can be made to an inherited IRA; beneficiaries can only take distributions from the account.

IRA - Individual Retirement Account Practice Test

IRA - Individual Retirement Account Practice Test

IRA IRA Beneficiary Rules and Inherited IRAs 2