EDB Disability Exemption
We have a client that inherited an IRA in 2021. The person passed away in 2020. It has now been discovered that the inheritor was actually on SSDI and would have been an EDB. In 2021 they did not take and RMD as we thought they were under the new 10 year rules. In 2022 RMDs were waived, however it sounds like EDBs still had to take an RMD. As it appears we have elected a 10 year rule for this client is there anyway to change them to an EDB and use life expectancy payouts. To our knowledge there has never been a formal election as the tax law is a mess on the new 10 year rule. Thanks.
Permalink Submitted by Alan - IRA critic on Fri, 2023-01-06 00:25
Did the IRA owner pass prior to or after their RBD? If prior, client could have opted out of EDB treatment and into the 10 year rule, but not if owner passed post RBD. Suggest client make up the missed 2021 and 2022 EDB RMDs and file Form 5329 to request the penalty waivers, and then proceed with annual LE RMDs. The penalty for missed EDB RMDs for 2021 and 2022 were not waived.