Inherited IRA Missed RMDs
I have a client who inherited his dad’s IRA in May of 2020. His dad had begun RMD’s (passed at age 82). As I understand it, my client should have taken RMD’s in 2021 and 2022 (as he is subject to the 10-year rule with annual distributions), but he did not do so. I also understand that a recent IRS notice states that penalties for missed distributions in 2021 and 2022 will be waived. But now what does my client need to do? Begin taking distributions this year for *just* this year or for this year *and* the disitrbutions missed in 2021 and 2022? Appreciate the insight!
Permalink Submitted by Alan - IRA critic on Wed, 2023-06-21 21:24
It is widely expected that the 2021 and 2022 missed RMDs will not have to be made up, but we won’t know for sure until the proposed Secure Regs are finalized. It is also expected that the proposed Regs will be finalized before year end. If they are not it is also possible that the IRS will end up waiving the 2023 annual RMD just like they did last year, since nothing will have changed. Irregardless, since this inherited IRA must be drained by 2030 the client might be wise to start taking distributions to eliminate a large lump sum at the end.