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TAX / PERSONAL FINANCIAL PLANNING

Failure to start RMDs designated beneficiary.” These are now the only
individuals allowed to use the life expectancy
payout method.
at the correct time eligible designated beneficiaries:
The following considers each of the five types of

could result in excise 1. The account owner’s surviving spouse
Surviving spouses still receive the special treatment
available in the original rules under the changes
taxes levied on the made by the SECURE Act. They can opt to be
treated as a beneficiary of the IRA or elect to be
treated as its owner. A spouse who chooses to be
missed distribution. treated as a beneficiary of the IRA can step into
the shoes of the deceased spouse. If the owner dies
before his or her required beginning date (or at any
age, for Roth IRA owners), RMDs to the surviving
spouse can be postponed until the later of (1) the
Sec. 401(a)(9)(B)(iii) provided an exception that year following the owner’s death, or (2) the year
allows designated beneficiaries to take distribu- of the owner’s required beginning date for RMDs
tions over their own life expectancy. Beneficiaries (Sec. 401(a)(9)(B)(iv)). Generally, the owner’s
must make this election by beginning distribu- required beginning date for RMDs is April 1 of the
tions within one year after the date of the IRA calendar year following the calendar year in which
owner’s death. This rule was also changed by the the owner attains the applicable age for beginning
SECURE Act. RMDs. At that time, RMDs will be based on
Sec. 401(a)(9)(B)(iv) provides a special rule for the the surviving spouse’s life expectancy. (Note: The
spouse of the decedent, who can “step into the shoes” SECURE Act and SECURE 2.0 increased the
of the deceased IRA owner and follow RMD rules as RMD beginning age to 73 in 2023 and follow-
if the IRA account had been his or hers all along. ing (for individuals attaining age 72 after Dec.
31, 2022) and 75 in 2033 and following. For this
THE SECURE ACT’S CHANGES reason, this article refers to the “required beginning
The original SECURE Act introduced Sec. 401(a) age” rather than a specific age.)
(9)(H), which applies only to beneficiaries of In addition, beginning in 2024, the SECURE
owners who die after Dec. 31, 2019. Sec. 401(a)(9) 2.0 Act allows the spouse to be treated as the IRA’s
(H)(i) lengthens the required distribution period original owner. This is more favorable if the surviv-
from five years to 10 years and applies the rule to ing spouse is younger. In that case, RMDs would
all designated beneficiaries regardless of whether be based on the younger spouse’s life expectancy,
the decedent had begun RMDs. Sec. 401(a)(9) and distributions would not need to begin until the
(H)(ii) also introduces the concept of the “eligible spouse reached the required beginning date.

IN BRIEF retirement accounts (IRAs) must take. spouse, a child younger than the age
■ For IRA owners dying after Dec. 31, of majority, a disabled individual, a
■ The Setting Every Community Up for 2019, only an “eligible designated chronically ill individual, and a person
Retirement Enhancement (SECURE) Act beneficiary” may withdraw inherited no more than 10 years younger than
of 2019, P.L. 116-94, and the SECURE IRA assets over the beneficiary’s the deceased IRA owner.
2.0 Act (Division T of the Consolidated lifetime. Others generally must ■ CPA advisers can guide beneficiaries
Appropriations Act, 2023, P.L. 117- withdraw the entire balance within 10 in determining when they must begin
328) further complicated the regime years. RMDs and in preserving the account’s
of required minimum distributions ■ Eligible designated beneficiaries assets.
(RMDs) that inheritors of individual are the account owner’s surviving
To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.

10 | Journal of Accountancy April 2023