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5-year Rule

Deceased IRA Owner Died On or After Their RMD Required Beginning Date - The 5-year rule never applies if the owner died on or after his or her required beginning date.

Deceased IRA Owner Died Before Their RMD Required Beginning Date - 

  • IRA Beneficiaries Not Taking Life Expectancy Payments - The 5-year rule requires the IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the fifth anniversary of the owner’s death.

Example #5: if the owner died in 2019, the beneficiary would have to fully distribute the plan by December 31, 2024. The beneficiary is allowed, but not required, to take distributions prior to that date.

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CAUTION: The 5-year rule generally applies to:

  • All beneficiaries if the deceased IRA owner died in a year ending before 2020.
  • It also applies to beneficiaries who are not individuals (such as a trust) if the owner died in a year ending after 2019.

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