IRA vs 403b
Are the rules the same for an inherited 403b as an inherited IRA? If the deceased took the full RMD in 2022 and passed away late in the year, is the beneficiary required to take anything additional for 2022?
- Yes, that is correct. However, the remaining 1000 of his 2022 RMD can be taken in any combination between the two of you. For example, if one of you wants to distribute the full 1000 plus their 2023 beneficiary RMD, the year of death will be satisfied. The remaining 1000 must be distributed by 4/18 (or 10/16/2023 if an extension is filed) to avoid having to file a 5329 to request a penalty waiver.
- You are correct about annual beneficiary RMDs in years 1-9 of the 10 year rule period. You might want to do a direct rollover by the end of this year to an inherited IRA to establish a separate account if you are younger than your brother, as that would allow you to use your own age for your annual RMDs instead of that of your older brother. An IRA direct rollover may also be used to reduce the expenses of the 403b plan since many of them have rather high expense investment options.
Thank you. This is great info as I have been getting differnt opinions from Fidelity and various CPA’s, none of which were certain about their opinions. My brother and I have been given different amounts for our future RMD’s supposedly based on our ages but in reading your take on it, would a yourger person have a smaller RMD? My brother is 2.5 years younger than me and he has be given bigger RMD number.
His RMD should be smaller than yours since he is younger. There could be a divisor error, or perhaps an incorrect prior year end value was used to calculate the RMDs. You each inherited 50%, correct?
Yes, we each inherited 50% but the numbers we have each heard from Fidelity have been all over the map. They have not been accurate in discussing what my father her took in 2022. I was told over the phone that he only took 5k in 2022 and then I received a 1099 for 11k this week. I will be calling them again tomorrow to discuss. I was also told that his RMD was 19k but I am sure that is incorrect as he has been taking 12k/yr for numerous years. I continue to be amazed at how uninformed most of their representatives seem to be.
Permalink Submitted by Alan - IRA critic on Thu, 2023-02-02 17:26
They are the same for non spouse beneficiaries. If the participant completed the 2022 year of death RMD, there is no additional distribution required for 2022. However, the 2023 RMD requirements vary depending on the age of decedent in 2022, and the type of beneficiary (10 year rule or EDB beneficiary). 403b plan rules might also come into play if more restrictive than IRS RMD rules.
Permalink Submitted by Jeff White on Thu, 2023-02-02 20:59
So my father was taking a 12k RMD ($1000/month) for the past number of years. He passed away in early Nov so this year he only took 11k. His remaining 403b was divided into 2 new acounts between my brother and I. Am I correct in thinking that we each need to take a $500 RMD to satisfy the requirement for 2022 and then we will each have a new annual RMD requirement going forward in the 10 year window?