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February 28, 2009

My client’s four children are the beneficiaries of his IRA. They each split their share of the inherited IRA into separate inherited IRAs the year following ….

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My client’s four children are the beneficiaries of his IRA. They each split their share of the inherited IRA into separate inherited IRAs the year following ….

My client’s four children are the beneficiaries of his IRA. They each split their share of the inherited IRA into separate inherited IRAs the year following the year he died ( he died last year and they split the account this year). There is some disagreement as to whether they must use the oldest beneficiary’s life expectancy to calculate their distributions for this year, or if they can use their own life expectancies? In fact, we are looking at two books, and one says the oldest beneficiary’s life expectancy must be used, and the other says each beneficiary can use their own. Can they use their own life expectancies? Or are they required to use the life expectancy of oldest beneficiary?

Each beneficiary can use his/her own life expectancy to calculate his/her RMD amount for this year.

The confusion may have come about, because when the Final RMD regulations were issued, it required the life expectancy of the oldest beneficiary to be used in such cases (i.e. for the year of the split, when the split occurred in the year following the year of death). However the IRS subsequently issued regulations modifying that provision, allowing each beneficiary to use their own life expectancy in the year of the split.

Cite TD 9130

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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