How to Decide on RMDs for Eligible Designated Beneficiaries

​The SECURE Act of 2019 introduced a new term “Eligible Designated Beneficiary.” The Act established a 10-Year Rule as the maximum payout period for inherited retirement accounts that were inherited from participants dying after 12/31/2019, with a few exceptions. The exceptions apply to Eligible Designated Beneficiaries (EDBs), defined as follows:

• Surviving spouse of Participant. On the death of the surviving spouse, the Exception ceases and the 10-Year Rule payout applies to the beneficiary.
• A chronically ill or disabled heir may continue to recalculate RMDs under the 2001 Rules.
• Heirs not more than 10 years younger than the original owner (participant) may continue to recalculate RMDs under the 2001 Rules. Upon his or her death, the 10-Year Rule payout applies. This Exception is beneficial to friends and siblings of a decedent.
• A minor child (but not a grandchild) up to the age of majority (depending on state law), or age 26 if the child is still in school, can follow the 2001 Rules. When the child is no longer a minor or is greater than 26 years old, the 10-year payout period begins. 

​ProTracker Advantage® fully implements the SECURE Act provisions. Here’s an example of the Advantage RMD Calculator setup screen for an Eligible Designated Beneficiary (a spouse). See Step 5 (10-Year Rule Exception checkbox, with Reason):

​For more information about calculating Required Minimum Distributions and documenting them, click on https://www.protrackerRMD.com.