Beneficiary RMD Rules

After the account owner's death, beneficiaries of retirement plans and IRAs must follow specific required minimum distribution (RMD) rules. Beneficiaries include individuals or entities chosen by the account owner. Depending on the account owner's death date (before or after 2019), beneficiaries face different RMD requirements due to the SECURE Act changes.

Spouses have more options than non-spouses for inherited accounts. If the account holder died before their required beginning date, spousal beneficiaries can roll over the account or use different distribution options. Non-spouses generally have limited options, especially under the 5-year or 10-year rules.

Eligible designated beneficiaries (such as spouses, minor children, disabled individuals, or those close in age to the account holder) have additional distribution options, including life expectancy-based distributions. Non-eligible designated beneficiaries must empty the account within ten years.

Inherited Roth IRAs follow similar RMD rules, though contributions are tax-free. Withdrawals of earnings are generally tax-free if the account is over five years old. For qualified retirement plans, beneficiaries may need to consult the plan administrator for distribution options, as rules may vary.

Income tax applies to distributions based on the original plan's rules, with some exclusions for survivor annuities.