3688 / How are the minimum distribution requirements met when an IRA owner dies before the required beginning date?

Beginning in 2020, beneficiaries who are not classified as eligible designated beneficiaries (most non-spouse beneficiaries) must deplete an inherited retirement account within 10 years of the original owner’s death.  When the IRA owner died before their required beginning date, beneficiaries subject to the ten-year rule can take distributions as they choose throughout the 10-year period, so long as the account is emptied by the end of year 10.

Post-SECURE act, one way an individual qualifies as an eligible designated beneficiary is if they are not more than ten years younger than the original account owner.  These beneficiaries are permitted to take distributions based on their own life expectancy and are not limited by the 10-year rule.  However, based on the “at least as rapidly” rule, the 2022 proposed regulations required a beneficiary to fully empty the account when the beneficiary’s life expectancy ended (regardless of whether they were still living).  While the rule was rarely insignificant if the beneficiary was younger, it penalized older beneficiaries.

Under the 2024 final regulations, eligible designated beneficiaries can take distributions over their own life expectancy or the original owner’s life expectancy, whichever is longer.  These calculations are based on the IRS single life expectancy table.