Only the IRS Could Give a Dead Man a Life Expectancy
- 2 days ago
- 5 min read
Perspective Matters
KEY TAKEWAYS
A dead person can have a “life expectancy” — at least for IRS purposes. When an estate or other non-person inherits an IRA, the deceased owner’s own remaining single life expectancy is used to calculate required distributions — the so-called “ghost-life rule.”
Which rule applies depends on timing, and Roth IRAs are always treated one way. If the owner died before their required beginning date, the 5-year rule applies; if on or after, the ghost-life rule applies. Since Roth owners are never subject to lifetime RMDs, Roth IRAs inherited by an estate always fall under the 5-year rule.
Getting the calculation wrong is expensive. A missed or miscalculated RMD can trigger a 25% IRS penalty on the shortfall — reason enough to work with an advisor who tracks these rules closely, especially given how often beneficiary designations create unintended tax consequences.
You’d think there’d be certain things we’d all agree on easily – such as a deceased person not having a life expectancy. You may be scratching your head that I’m even mentioning this, but believe it or not, there are some circumstances in which someone who has passed away will have a life expectancy, at least according to the IRS. And to add to the fun – it becomes relevant when the beneficiary of an IRA is a “non-person.”
Confused yet? Welcome to the club. This is exactly the kind of quirky-but-costly wrinkle that’s easy to miss unless you’re working with an advisor who makes it their business to track every twist in these retirement account rules — which, as a CFP® and member of Ed Slott’s Master Elite IRA Advisor Group™, I do.
I’m talking about the “ghost-life rule,” which pertains to certain situations for IRA beneficiaries who may be required to take annual distributions from traditional IRAs.
THE GHOST RULE LIFE EXPLAINED
Monday, July 13, 2026
By Sarah Brenner, JD Director of Retirement Education
The SECURE Act of 2019 changed many rules for inherited IRAs. However, it left intact the rules for non-living (non-person) beneficiaries, such as an estate. For these non-designated beneficiaries (NDBs), the same two possible payout options still exist:
If death occurs before the owner’s required beginning date for starting required minimum distributions (RBD), payments must be made under the 5-year rule. The account must be emptied by December 31 of the 5th year after the year of death. This is the only time the 5-year payout rule is applicable — when a person dies before the RBD with an NDB. There are no annual required minimum distributions (RMDs) required within the 5-year period. Because Roth IRAs are not subject to lifetime RMD requirements, all Roth IRA owners are considered to have died before their RBD. Therefore, whenever an estate or other NDB is the beneficiary of a Roth IRA, the 5-year rule will always apply.
If death occurs on or after the RBD, annual stretch RMD payments are made over the deceased IRA owner’s remaining single life expectancy, had he survived. This is known as the “ghost-life rule.” The ghost-life rule will never apply to an NDB who inherits a Roth IRA. Since lifetime RMD requirements do not apply to Roth IRAs, a Roth IRA owner cannot die on or after the RBD.
To calculate the ghost-life rule payments, start with the single life expectancy factor of the deceased account owner in the year of death. For the first RMD (for the year after the year of death), use that factor minus 1.0. For succeeding years, use the preceding year’s factor minus 1.0. (This is different from standard inherited IRA RMD calculations in which the first RMD uses the age of the beneficiary in the year after the year of death.)
Example: Sal dies at age 87 (well after his RBD) and leaves his IRA to his estate (an NDB). Sal’s son, Manny, age 40, inherits through the estate. RMDs to Manny would be based on his father Sal’s remaining single life expectancy. The first RMD in the year following the year of death would be based on Sal’s 6.1-year remaining single life expectancy (7.1 for an 87-year-old, minus 1.0).
Copyright © 2026, Ed Slott and Company, LLC Reprinted from The Slott Report, July 13, 2026, with permission https://irahelp.com/the-ghost-life-rule-explained/ Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.
Before SECURE and SECURE 2.0, there were only two types of beneficiaries, and the rules were simpler. Today they’re a maze — and missing a wrinkle like the ghost-life rule isn’t just an academic slip. Get the calculation wrong, and a beneficiary like Manny could end up over-distributing and losing tax-deferred growth, or under-distributing and facing a 25% IRS penalty on the shortfall1. That’s real money, over a rule most people have never heard of.
This is exactly why working with the right advisor matters. As a Certified Financial Planner® and a member of Ed Slott’s Master Elite IRA Advisor Group™, I focus specifically on the intersection of tax law and retirement accounts — Trump accounts, HSAs, IRAs, 401(k)s, and more. That’s precisely where new rules create the most confusion, and the most risk. At Prism Planning and Solutions Group, we act as fiduciaries for our clients at all times. Our goal is to help you avoid making important financial decisions in the dark — we’ll help you understand what the rules require today, what’s still unsettled, and how to protect yourself in the meantime.
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