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But what is the end game? Why do we wade through the morass of IRS rules and complicated legislation and oftentimes fantastically dry data? It is an overall effort to help people reach and create a “successful retirement.” But what does that mean? What is retirement? Fantasyland says a person works a job for 40+ years and saves a little annually through IRA contributions and 401(k) salary deferrals. And when this person stops working at age 65, he can ride off into the sunset and do all the things he wanted to do previously, but could not because he was tied to a desk or a mop or a piece of heavy construction equipment. 

A few people may still fall into this category — workers who maintain steady employment at a single company followed by blissful retirement. But that ain’t the case for most of us. Research shows the average person will have 12 jobs during his or her lifetime. Also, in March 2023, the Bureau of Labor Statistics reported that only 56% of civilian workers participate in a retirement plan. All of us are searching for the right professional, personal and financial combination. How can I keep a roof over my head, food on the table, do the things I enjoy today, but also sleep comfortably knowing my future – my “retirement” years – will be waiting for me? 

For those who find gratifying employment and mental solace, congratulations are in order! For most, it’s a never-ending search. The Dirty Heads have a song called “Vacation.” The lyrics say: “A-a-ay, I’m on vacation. Every single day ’cause I love my occupation. A-a-ay, I’m on vacation. If you don’t like your life, then you should go and change it.” 

I agree. If you don’t like where you’re at, do everything in your power to change it, because fantasyland retirement will not mystically appear at age 65. Create a budget. Meet with a financial advisor. Go back to school. Develop a plan. Maintain a long-term view. Yes, this is boring, real-life stuff. But if you stick to the plan, it will bear fruit. By sticking to the long-term plan, short-term gratification opportunities should present themselves. 

Recently I was presented with my own short-term “live for today” opportunity. My son is spending his freshman year studying abroad in Florence, Italy, and my wife and I were able to visit. We wore out a big part of the country — Venice, Rome, Pisa, Florence, Cinque Terre. Daily step counts reached 27,000. At one point, breathing heavily and ascending a long, steep gravel hill in Boboli Gardens, my wife said, “Good thing we came here while we’re young. No way I could climb this if I was retired.” 

And thus, this Slott Report entry was born. Fantasyland says every septuagenarian energetically bounces around Europe. Reality tells us otherwise. (Run a Google image search for “elderly couple asleep in gondola.”) While we all must deal with everyday obstacles, it is imperative to put your best foot forward. We only get one shot at life. Face reality and create positive change, because “blissful retirement” as it’s portrayed is not promised — nor will it magically appear.


Ever since the SECURE Act created a 10-year payout rule for most IRA beneficiaries, that topic has garnered the bulk of conversation. This is understandable. Not only was the 10-year rule a brand-new payout structure, but questions swirling around application of the 10-year window remain unsettled. The IRS continues to kick the can down the road when it comes to determining if required minimum distributions (RMDs) apply within the 10-year period for certain beneficiaries. Notices 2022-53 and 2023-54 waived the penalty for “missed” RMDs within the 10-year period for 2021, 2022 and 2023.

Despite the upheaval of the IRA beneficiary payout rules, regardless of the introduction of “eligible designated beneficiaries” as a new class of heirs, and subsequent to the original SECURE Act/SECURE 2.0/IRS Notices/proposed regulations…one thing has remained unchanged: the payout rules applicable when a non-designated beneficiary (what I like to call a “non-person” beneficiary – like an estate) inherits an account. As has been the case for many years, there are only two possible outcomes: the “ghost rule” or the 5-year rule.

Whether the ghost or the 5-year rule applies depends upon when a person dies in relation to his required beginning date (RBD), which is when RMDs are officially “turned on.” The RBD is April 1 of the year after the year a person turns 73. (Prior to the RMD age being raised to 73, the RBD was April 1 of the year after a person turned 70 ½ or 72, depending on what RMD age was in effect at the time.) The RBD is a definitive date on the calendar, and we all have one. You can either die before that date, or you can die on or after that date. And if you have a non-person (like an estate) as your IRA beneficiary, WHEN you die in relation to the RBD matters.

BEFORE: If a person dies BEFORE the RBD with a non-person beneficiary (we’ll assume it’s the estate in this article), the 5-year rule applies. This is the only time the 5-year IRA beneficiary payout rule presents itself. Year One starts in the year after the year of death. There are no annual RMDs within the 5-year period. The only stipulation is that the estate-owned inherited IRA account must be emptied by the end of the fifth year. Interestingly, any 5-year payout schedules started in 2016 – 2019 became 6-year schedules. How? The CARES Act RMD waiver in 2020 also eliminated 2020 from any 5-year calculation, so anyone in this category essentially has a 6-year rule. Also, be aware that all Roth IRA owners, no matter how old they might be, are always deemed to die before the RBD, because Roth IRAs do not have lifetime RMDs.

ON or AFTER: If a person dies ON or AFTER the RBD with a non-person beneficiary, we have the ghost rule. The estate-owned inherited IRA will have annual RMDs based on the deceased IRA owner’s remaining single life expectancy, had he survived. One quirk to remember – we use the IRA owner’s age in the year OF death to calculate the first RMD factor, and then minus one for each year thereafter. This is different than the standard stretch IRA RMD calculation where we use the beneficiary’s age in the year AFTER the year of death.

Ghost Rule Example: Roger dies at age 87 and leaves his IRA to his estate (a non-person beneficiary). RMDs from this estate-owned inherited IRA are predicated on Roger’s remaining single life expectancy factor, minus one each year. The first RMD in the year following the year of death is based on Roger’s 6.1-year remaining single life expectancy factor (7.1 for an 87-year-old in the year OF death, minus one).


Copyright © 2024, By Andy Ives, CFP®, AIF® Ed Slott and Company, LLC Reprinted from The Slott Report, February 7, 2024, with permission. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.