Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: If a nonspouse beneficiary of an IRA chooses to stretch based on life expectancy, can the beneficiary later change her mind?

Answer: If the decedent had not reached the RBD at the time of death, and there is a non-spouse individual designated beneficiary, for the years following the year of death the account may be distributed over the designated beneficiary’s remaining life expectancy.   The RMD for the beneficiary is calculated as follows:

Determine the designated beneficiary’s life expectancy using the beneficiary’s age at the end of the calendar year following the year of the owner’s death using the Single Life Table; and in each subsequent year, subtract one year from the number used in the prior year.

A nonspouse beneficiary can never take less than the minimum required distribution, but the beneficiary may take more at any time.

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