2022 RMD Question
Hello,
I have a client who’s mother passed in 2021 and her IRA when to an IRA BDA for the mother’s estate and my client inherited her portion of the estate in 2022. The trustee of the trust is my client’s older brother and it is a qualified trust. With the new information that there may need to be RMD’s take during the 10 year rule what life expectancy would we use for my client’s RMD for 2022? Is there any guidance out there? Any help would be greatly appreciated.
Thank you.
Kevin
Permalink Submitted by Alan - IRA critic on Tue, 2022-04-05 13:48
What was the actual IRA beneficiary wording? Was the trust named directly on the IRA?
Permalink Submitted by Kevin O'Hearn on Tue, 2022-04-05 14:13
Thank you Alan. The IRA BDA for the mother’s trust was named on the registration: IRA – BDATTEE MICHAEL E CEETRST BEATRICE B DCEE TR U/ATRST DTD 05/22/2009 Beatrice passed in 2021. Michael and Angel (my client) are the beneficiaries of the trust. The recived the assets fromthe trust IRA BDA in 2022. Michael is older.
Permalink Submitted by Alan - IRA critic on Tue, 2022-04-05 16:17
If mother passed on or after her RBD, the proposed IRS Secure Act Regs include the need for a qualified trust to take annual RMDs within the 10 year rule period. However, this proposal is controversial and may be deleted or modified in the final Regs adopted before year end. Therefore, the trustee should wait until the Reg goes final to determine if a 2022 annual RMD will be required or not. Of course, if the trustee wants to spread out the tax liability over the 10 years, a distribution can be made without waiting. And if mother passed prior to RBD, there would be no annual RMDs within the 10 year rule.
Above assumes the trust is technically qualified and was included as beneficiary of the mother’s IRA. If not qualified then the 10 year rule will not apply. Note that it is possible for the BDA account to be assigned to the trust (eg if the estate was named and a pour over will resulted in transfer to the trust) and in such a case the trust would not be qualified because it was not actually named as mother’s IRA beneficiary. Therefore, my question regarding the actual beneficiary on mother’s IRA (not the BDA account) was to confirm that the trust was in fact qualified instead of just assuming by the BDA title that it was qualified, since non qualification would totally change the Secure Act RMD determination.