Eligible Designated Beneficiary (EDB)
An Eligible Designated Beneficiary (EDB) is one of five categories of IRA beneficiaries who are exempt from the SECURE Act's 10-year distribution rule and can still stretch inherited IRA distributions over their own life expectancy: surviving spouses, minor children of the decedent, disabled individuals, chronically ill individuals, and beneficiaries not more than 10 years younger than the decedent.
Exam Tip
Memorize 5 EDBs: Spouse, Minor children (of decedent), Disabled, Chronically ill, Not 10 years younger. Minor = age 21 (federal law). After 21, child gets 10 more years to empty. Grandchildren are NOT EDBs!
What is an Eligible Designated Beneficiary?
Under the SECURE Act of 2019, most non-spouse beneficiaries must empty an inherited IRA within 10 years. However, Congress created an exception for Eligible Designated Beneficiaries (EDBs), who can still use the pre-SECURE Act life expectancy "stretch" method.
The Five EDB Categories
| Category | Definition | Notes |
|---|---|---|
| 1. Surviving Spouse | Legal spouse at time of death | Most flexible options available |
| 2. Minor Child of Decedent | Biological or legally adopted child | Until age 21 per federal law |
| 3. Disabled Individual | Unable to engage in substantial gainful activity | Must meet IRS definition |
| 4. Chronically Ill | Cannot perform 2 of 6 ADLs | Or requires substantial supervision |
| 5. Not 10+ Years Younger | Within 10 years of decedent's age | Including older beneficiaries |
Important EDB Rules
| Rule | Description |
|---|---|
| Minor Child Age | Federal definition: until 21st birthday |
| After Reaching 21 | 10-year rule kicks in |
| Disabled/Chronic Determination | Must exist at death of account owner |
| 10-Year Age Difference | Calculated as of owner's death |
EDB Distribution Options
| EDB Type | Distribution Options |
|---|---|
| Surviving Spouse | Treat as own, remain as beneficiary, 10-year rule, lump sum |
| Minor Child | Life expectancy until 21, then 10-year rule |
| Disabled/Chronically Ill | Life expectancy distributions |
| Not 10 Years Younger | Life expectancy distributions |
Minor Child Special Rules
| Milestone | What Happens |
|---|---|
| Before Age 21 | Life expectancy RMDs based on child's age |
| At Age 21 | 10-year rule begins |
| By Age 31 | Account must be fully distributed |
| State Law Age | Irrelevant - federal law uses 21 |
Non-EDBs (10-Year Rule Applies)
| Beneficiary Type | Status |
|---|---|
| Adult Children | Not EDB (10-year rule) |
| Grandchildren | Not EDB (10-year rule) |
| Siblings | Not EDB (unless within 10 years of age) |
| Friends | Not EDB (unless within 10 years of age) |
| Most Trusts | Not EDB (10-year rule) |
CFP Exam Focus
CFP candidates should memorize:
- All five EDB categories
- Minor child = until age 21 (federal, not state law)
- After age 21, minor children get 10 more years (so empty by 31)
- Disabled/chronically ill status must exist at owner's death
- "Not 10 years younger" includes older beneficiaries
Study This Term In
Related Terms
RMD (Required Minimum Distribution)
RMDs are mandatory annual withdrawals from traditional retirement accounts (Traditional IRA, 401(k)) that must begin at age 73, calculated based on account balance and life expectancy.
IRA (Individual Retirement Account)
An IRA is a tax-advantaged personal retirement savings account that individuals can open independently, offering either tax-deductible contributions (Traditional) or tax-free withdrawals (Roth).
Roth IRA
A Roth IRA is a retirement account funded with after-tax dollars that grows tax-free and allows tax-free withdrawals in retirement, with no required minimum distributions.