RMD from 401(k) for Beneficiaries

A participant who was already receiving RMDs died in 2024.  He has 3 children as equal beneficiaries (no spouse).  We are getting ready to roll their 1/3 interests (about $1.8 million each) to their IRAs.

As they are Non-Eligible Designated Beneficiaries, I am reading that they are subject to the 10-year rule AND still must take an annual RMD distribution based their (or the decedent's) life expectancy.  They will want to take the minimum RMD and so I assume they would choose their life expectancy, each one being different based on their DOB.  Does this sound right? 

We would then direct the balance to be rolled to their IRAs.  Not that it matters to us as they are out of the plan at that point but would the 10-year rule continue with the IRA, meaning 9-years are remaining under the 10-year rule?

I will research further but thank you for comments. 

Tom 

Tom. Our broker/dealer calculates the RMD for each account (including inherited IRAs). I would assume all IRA custodians, provide this service. 

18 hours ago, Tom said:

each one being different based on their DOB.  Does this sound right? 

Yes, that sounds right. 

Here's what I found online: For most non-spousal beneficiaries who inherit an IRA after 2019, the IRA funds must be distributed to that beneficiary within 10 years after death. So, if an IRA owner dies in October 2024, the beneficiary must clean out the IRA no later than December 31, 2034.

https://www.kiplinger.com/taxes/irs-10-year-rule-for-inherited-iras-kiplinger-tax-letter

Thank you Bruce.  Yes it this were an IRA, the IRS Trustee would handle not us.  This is a medical group plan where the deceased participant has a directed-brokerage account at a bank who simply manages the account portfolio. The bank will take no role in the RMD which I understand. 

We will tell the 3 adult children they will get a life-expectancy RMD in January based on their father's life unless they elect otherwise (and they won't.)  After that, the IRA custodian can take care of RMDs.

Tom

Presumably you are addressing need to take decedent's 2024 RMD, which must be taken by 12/31/25. And presumably you could request the RMD figure from whoever had been providing it for prior years. Government not particularly fussy about which IRA(s) the RMD comes from. Believe that per Secure Act 2.0 when beneficiaries inherit equally, iRS will only go after an inheritor who doesn't pony up her/her pro-rata share. Once decedent's RMD taken each IRA is on its own based on respective beneficiary's age, as you indicated.

20 hours ago, FPGuy said:

need to take decedent's 2024 RMD, which must be taken by 12/31/25.

I didn't know that. Below is another article that goes over some of the things FPGuy discussed above. 

https://stwserve.com/new-irs-regulations-on-year-of-death-rmds/