Question: My mother named my 12-year-old son as the beneficiary of her IRA. Since her grandson is a minor, is he eligible for the exception to the 10-year payout rule under the SECURE Act?
Answer: The heart of the SECURE Act is the mandated payout of many plans in about 10 years after the plan owner dies.
If the beneficiary of the plan is an individual, then, in general, the entire plan balance will have to be paid out by the 10th anniversary of the plan holder’s death.
Minor children are considered what is known as an eligible beneficiary so that the 10-year payout will not apply to them. However, the SECURE Act specifically limits this to a child of the IRA plan holder. It is not applicable to any minor beneficiary. While the grandson is a minor, he is not a child of the IRA plan holder.
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