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Special rules apply if the spouse is more than 10 on or before Feb. 24, 2022) that met the require-
years younger than the owner. For these younger ments of pre–SECURE Act regulations (Regs.
spousal beneficiaries, the owner’s lifetime RMDs Sec. 1.401(a)(9)-6, Q&A-15) to retain that plan
can be calculated over the joint life expectancy of provision. In general, under these plans, the age of
the owner and spouse. majority would be 26 if the child has not completed
A younger surviving spouse who needs financial a specified course of education. In addition, a child
support may choose to treat an IRA inherited who is disabled within the meaning of Sec. 72(m)
before age 59½ as a beneficiary IRA. This allows (7) when he or she reaches the age of majority may
the spouse to take distributions as desired without be treated as having not reached the age of majority
incurring the 10% penalty for early withdrawals, so long as the child continues to be disabled.
regardless of age. Note, however, that withdrawals
are not tax-free from a Roth IRA account if it has 3. Disabled individual About the
been open for less than five years. The “five-year “Disabled” is defined under current regulations con- author
rule” related to Roth contributions would still apply sistent with Sec. 72(m)(7) as someone who is unable
Dayna E. Roane,
and could potentially generate taxable income on to engage in any substantial gainful activity by reason
CPA, CGMA, is
the earnings (but no penalties). of any medically determinable physical or mental
a shareholder
A spouse may also choose to treat the inherited impairment that can be expected to result in death or
with Perry, Roane
IRA as a beneficiary IRA if he or she is older to be of long or indefinite duration. For individuals
& Henley PC in
than the deceased spouse. This could result in a younger than 18, the proposed regulations would
Niwot, Colo. In
smaller RMD than the one based on the surviving substitute having a medically determinable physical
2021, she received
spouse’s age. or mental impairment that results in marked and
the Lawler Award
To be treated as a beneficiary, the spouse must severe functional limitations, in place of the “gain-
for best JofA
take RMDs. If no RMD is taken before the end ful activity” provision applicable to older disabled
article of 2020
of the year following the account owner’s death, individuals (Prop. Regs. Sec. 1.401(a)(9)-4(e)(4)(ii)).
(“Deducting Home
the account will be deemed to be rolled over to the Office Expenses,”
spouse’s own IRA (Prop. Regs. Sec. 1.408-8(c)). 4. Chronically ill individual
JofA, May 15,
If the spouse is treated as the owner of the IRA, “Chronically ill individual” means any individual
2020).
normal IRA rules apply, whether regular or Roth. who has been certified by a licensed health care
In other words, the spouse is not required to take practitioner as (1) being unable to perform (without
an RMD until his or her required beginning date. substantial assistance from another individual) at
If the IRA is a Roth, the spouse is not required to least two activities of daily living for an indefinite
take RMDs at all. This gives the spouse the only but lengthy period due to a loss of functional
remaining opportunity after SECURE Act changes capacity; (2) having a similar level of disability as
to pursue the “stretch” IRA concept, naming his or determined under IRS regulations in consulta-
her own beneficiaries and deferring tax longer after tion with the Department of Health and Human
his or her death. Services; or (3) requiring substantial supervision to
protect the individual from threats to health and
2. A child who is younger than the age of majority safety due to severe cognitive impairment (Sec.
Beneficiaries who have not yet reached the age of 401(a)(9)(E)(ii)(IV)).
majority can make withdrawals from the account
over their own life expectancy. They lose the 5. A person not more than 10 years younger than
“eligible designated beneficiary” designation when the deceased IRA owner
they reach the age of majority and the 10-year rule For nonspousal eligible designated beneficiaries
goes into effect. They then have until Dec. 31 of the meeting this description, RMDs must begin by
10th year from the child’s attainment of majority to Dec. 31 of the year after the deceased owner dies.
withdraw all the funds from the account. If the deceased owner had not reached the RMD
The age of majority for this second type of required beginning date, the RMD is calculated
eligible designated beneficiary is defined in Prop. based on the beneficiary’s life expectancy. If the
Regs. Sec. 1.401(a)(9)-4(e)(3) as being reached on owner was required to take RMDs, the distribu-
the child’s 21st birthday. Note, however, that the tions are based on the longer of the beneficiary’s or
proposed regulations would permit defined benefit the owner’s life expectancy.
plans that have used a prior definition of the “age If the eligible designated beneficiary dies before
of majority” (under plan terms that were adopted the account is entirely distributed, the 10-year

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