inherited IRA
A non-spouse inherits an IRA in 2022. The decedent had already started taking RMD’s years ago. Does the beneficiary of the inherited IRA have to take RMD’s for years 1 to 9 and then withdrawal the balance in year 10 OR can the beneficiary not take any distributions in years 1 to 9 and then withdrawal the total amount in year 10?
Permalink Submitted by Alan - IRA critic on Thu, 2022-06-30 19:35
The IRS proposed Secure Act Regs require annual RMDs for years 1-9 in this case, but these Regs are not yet final and public comments objecting to this provision have been filed. There is no way to know what the final Regs will say, but the non spouse will know by next year. For 2022, there is no beneficiary RMD due, but the beneficiary must complete the 2022 RMD of the decedent if not already distributed.
Permalink Submitted by Henry Chan on Thu, 2022-06-30 23:28
Is it your understanding proposed regulation is not law yet and as such if it is not finalized a taxpayer does not need to follow it and can follow the exisiting law that allow no RMD is required until year 10?
Permalink Submitted by Alan - IRA critic on Fri, 2022-07-01 01:08
Yes, however once the proposal goes final, it is possible that it will be retroactive to 1/1/2021, 1/1/2022, or may not take effect until 2023. It is also possible that the requirement will not go into effect at all. You are therefore in limbo with respect to 2023. Again, for 2022 you would only need to complete the decedent’s RMD if decedent did not. The final outcome does not affect you until 2023. It should also be noted that many beneficiaries under the 10 year rule would withdraw about an equal amount each year to avoid a large distribution in year 10. These equal distributions taken voluntarily would normally be well in excess of an annual RMD.