What Is 💮an Eligible Desi🐻gnated Beneficiary (EDB)?

An eligible designated beneficiary (EDB) is a deceased person's spouse or a minor child, or a disabled person, a ꦜchronically ill individual, or an individual not more than 10 years younger than the deceased. An EDB is a classification for individuals who inherit a retirement account.

Understanding Eligible Designated Beneficiaries

An eligible designated beneficiary (EDB) is always an individual. An EDB cannot be a nonperson entity such as a trust, an estate, or a charity.

The five categories of EDBs include:

• A surviving spouse
• A minor child less than 21 years of age
• A disabled individual
• A chronically ill individual
• Any other individual who is not more than 10 years younger than the deceased account owner

An EDB can take a lump-sum distribution of the entire inherited account, withdraw the balance from the inherited IRA account over their 澳洲幸运5开奖号码历史查询:life expectancy with 澳洲幸运5开奖号码历史查询:reꦛquired🥂 minimum distributions (RMDs) calculated annually by the plan, or follow the 10-year rule and empty the entire account by the end of the tenth ye𝕴ar following the year of the account owner’sꦐ death.

Distributions from a qualified retirement plan, such as a 401(k), are determined by the plan administrator. All beneficiaries must include taxable distributions in their gross income when filing taxes.

Who Quali🎐fies As Eligible Designated Beneficiary

Owner's Surviving Spouse

Surviving spouses 澳洲幸运5开奖号码历史查询:receive special treatment, allowing them to withdraw the ba✨lance from an IRA over the original owner’s life expectancy.

Alternatively, a surviving spouse can roll an 澳洲幸运5开奖号码历史查询:inherited IRA into their own IRA and withdraw when they take their own required minimum distributions (RMDs).

Owner’s Minor Child

A child who has not reached the age of 21, the age of majority according to the 澳洲幸运5开奖号码历史查询:Internal Revenue Service (IRS), is permitted to withdraw from an inherited retirement account using their life expectancy.

When the child reaches the age of 21, the 10-year rule for 澳洲幸运5开奖号码历史查询:designated beneficiaries who are not EDBs goes into effect. The child has until December 31 of the tenth year following their 21st birthday to withdraw all funds from the inherited retirement account.

Disabled Individual

According to the IRS, “Section 72(m)(7) of the Code provides that an individual shall be considered to be disabled if they are unable to engage in any substantial gainful activity because of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.” A disabled individual who inherits a retirement account will use their life expectancy to calculate RMDs.

Chronically Ill Individual

The IRS Code Section 7702B(c)(2)(A) states the term “chroni𒉰cally ill individual” means any individual who has been certified by a licensed healthcare practitioner as:

• (i) being unable to perform (without substantial assistance from another individual) at least two activities of daily living for at least 90 days due to a loss of functional capacity,
• (ii) having a level of disability similar (as determined under regulations prescribed by the Secretary in consultation with the Secretary of Health and Human Services) to the level of disability described in clause (i), or
• (iii) requiring substantial supervision to protect such individuals from threats to health and safety due to severe cognitive impairment.

A chronically ill individual who inherits a retirement account is allowed to use their life expectancy to calculate RMDs.

Any Other Individual N꧙ot More Than 10 Years Younger Than the Decedent

This category is a unique catch-all that includes certain friends and siblings who are identified as beneficiaries of a retirement account. An individual in this category who inherits a retirement account is allowed to use their life expectancy to calculate RMDs.

The Bottom Line

An eligible designated beneficiary (EDB) is a classification of individuals who inherit a retirement account. Five categories of individuals are considered EDBs, including the deceased's surviving spouse and minor children. The main benefit of being an EDB is time: you are allowed a longer period to withdraw funds from the inherited account compared to other beneficiaries.