An eligible designated beneficiary (EDB) refers to any individuals specified in the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 as the beneficiaries of a retirement account, namely a surviving spouse, a disabled or chronically ill individual, an individual who is not more than 10 years younger than the IRA owner, a minor child of the IRA owner as well as individuals named as IRA beneficiaries by certain trusts.
Major types of Eligible Designated Beneficiaries:
- Spouse beneficiary
Surviving spouses of a deceased IRA owner can either regard the IRA as their own account and withdraw the balance from the IRA stretching over life expectancy of the account holder, or to follow the 10-year rule and withdraw all balances within 10 years.
- Minor child of the account holder
Before the children of the deceased account holder reach 18, they can withdraw balances from the IRA at any time; when the children reach the age of 18, the 10-year rule comes into play and the children will have to withdraw all the money from the account of the decedent by Dec. 31 of the 10th year of their 18th birthday.
- Disabled or chronically ill individual
A disabled or chronically ill individual may choose either single life expectancy or the 10-year rule.
- Any other individual not more than 10 years younger than the deceased IRA owner
All the friends, sibling and other non-spouse beneficiaries who fall into this category can also be counted as the beneficiaries of a retirement account. Any individual that pertains to this category can either choose the single life expectancy option, or th