Inherited IRA RMDs for post 2019 deaths

Submitted by Robert Roselli on Wed, 2023-03-15 19:55

Yes, I know, you’ve received plenty of questions on this. I’m trying to convince my employer to pay for me to attend one of your two-day seminars, but it’s not cheap.

We have a 60-year client whose father passed away in 2020. From everything I read, RMDs will be mandatory, but they’re NOT mandatory at the time of the writing. If the rules didn’t change in 2020, my client would have been 58 on 12/31/2021, the date when distributions commenced, and by now that factor would be reduced by 2 (yes, I know the factors themselves changed, so it would be his age 58 factor of the new tables back in 2021 minus 2). I have three questions.

– Is the mandatory RMDs law? I don’t think so
– Would it likely be the factor of the beneficiary’s age on 12/31/23 and then subtract every year?
– Where can I go to reference this besides googling it and getting dragged all over the place?

As always, many thanks for the great advice provided in this forum.

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Permalink Submitted by Alan - IRA critic on Wed, 2023-03-15 20:21

Client is a 10 year rule beneficiary of deceased father, who passed after his RBD. The proposed Secure Act rules would require client to take beneficiary RMDs based on client’s age starting in 2021, but the IRS has waived the penalty for failing to take the 2021 and 2022 RMDs in this situation. All indications are that the IRS will finalize the proposed Regs by this fall, and 2023 beneficiary RMDs will be required.
Client’s divisor would have been 28.9 for age 58 under the new tables in 2021 and therefore 26.9 for 2023 since the divisor is reduced by 1.0 for each year after 2021.
SInce the inherited IRA must be drained by 2030, if client wants to draw it down equally in the 8 remaining years, he would have to take out more than the beneficiary RMD each year to avoid a large income increase in 2030 if he limits his distributions to just the RMD prior to 2030.

Permalink Submitted by Craig Smith on Thu, 2023-04-13 14:34

Alan, can you provide a source for the waived penalty for 2021 and 2022?

“Client is a 10 year rule beneficiary of deceased father, who passed after his RBD. The proposed Secure Act rules would require client to take beneficiary RMDs based on client’s age starting in 2021, but the IRS has waived the penalty for failing to take the 2021 and 2022 RMDs in this situation. All indications are that the IRS will finalize the proposed Regs by this fall, and 2023 beneficiary RMDs will be required.”

Permalink Submitted by Alan - IRA critic on Thu, 2023-04-13 14:55

N-2022-53 (irs.gov)

Permalink Submitted by Craig Smith on Thu, 2023-04-13 15:07

Thanks!