5 AND OUT RULE DURING COVID
George passed February 2019 and left his IRA to his son, James. Is it correct to assume that the 2020 RMD Waiver Rule (due to covid) would come into effect and that the fifth year of the “5 And Out Period” disbursement is 2025 and not 2024?
Thank you for your input.
Mark
Permalink Submitted by Alan - IRA critic on Thu, 2025-06-12 20:25
Yes, exactly correct. 2020 does not count with respect to the 5 years, so the deadline is 2025.
However, for IRA accounts life expectancy is the default method, so if James wanted to he could make up the life expectancy RMDs for 2021-2024 and file a 5329 to request that the penalty be waived for reasonable cause. The IRS documented in PLR 2008-11028 that the beneficiary could restore the stretch, but not necessarily the penalty waiver. The waiver was established by consistent IRS practice of granting penalty exceptions for just about everyone that filed a proper Form 5329 and for just about any reason (eg forgot, confusion, etc).
Permalink Submitted by Mark Fairclough on Fri, 2025-06-13 14:42
Thank you for taking the time to respond to my question.