Inherited IRA after the age of 72
Last year 2021 I understood that the IRS had clarification that as long as the beneficiary took out the proceeds by the 10th year he was fine, but now I hear that it had to be taken out each year for the 10 years. Please advise if this is true. How do you calculate it each year if that is the case. This is the case if it was a non spouse beneficiary.
Permalink Submitted by Alan - IRA critic on Wed, 2022-03-02 23:54
In a third reversal of opinion, the IRS is proposing that if the IRA owner passes on or after RBD, that beneficiaries under the 10 year rule must also take annual RMDs. At this time, this is only part of the 275 pages of proposed new regulations that is unlikely to be adopted before fall. Some of these proposals will receive blowback from the advisor community, so at this point I would not assume that this will stick, and if it does it may not be effective in 2022. A beneficiary should not take an annual RMD unless they wish to, and some will want to take annual distributions anyway to avert higher tax rates on a large distribution in year 10. To your question, if this is approved the annual RMD would be based on the single life table in the same manner as if the beneficiary was an eligible designated beneficiary using the stretch rules with annual divisor reduction of 1.0 each year. Again, annual RMDs are not proposed if the owner passed prior to RBD.