Successor Beneficiary Case Study

Most financial advisors are comfortable computing a Required Minimum Distribution (RMD) for a Participant who is alive. When the Participant dies and the Designated Beneficiary also dies, a Successor Beneficiary situation comes into play.

The ProTracker Advantage® RMD Calculator and Tracking Assistant handles Successor Beneficiary situations with ease. Here’s a recent case:

Fact Set:

• Participant (Dad Jones) died at 86 in 2006
• Designated Beneficiary (Son Jones) was born in 1949 and died at 73 in 2022
• Granddaughter (Sarah Jones) inherited as the Successor Beneficiary
• 12/31/2023 IRA balance was $201,200.70

Computation:
Dad died in 2006 (before 2020) and after his Required Beginning Date (04/01/1992)
Son inherited and started taking stretch RMDs in 2007 at age 58
Son’s longevity factor (“N”) in 2007 (age 58) was 28.9
Son died in 2022
Granddaughter inherited and continued the Son’s N-1 stretch IRA
As of 2024, seventeen (17) years have elapsed since Son inherited in 2007
Granddaughter’s factor for 2024 is Son’s 28.9 - 17 = 11.9
Granddaughter has to follow the 10-year rule starting from 2022 (when Son died), so IRA must be fully distributed by 12/31/2032

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