Inherited IRA RMD requirements waived?
We are still confused about IRS waivers for Inherited IRA RMD requirements. Here’s the situation:
* Client’s father passed in 2021
* IRA was inherited in the same year
* Father was 91 and had been taking RMDs (including 2021)
* Based on IRS guidance at the time, the client operated under the 10 year rule and understood that RMD’s would not be required. Hence, the client did NOT take an RMD in 2022 (or 2023)
I have received advice from a very well respected advisor that the waiver only pertained to penalties. I’ve read similar comments which confirm his advice. At the same time I’ve read other articles that indicate RMD requirements were waived in their entirety in 2022 (and 2023).
Please advise – is the client obligated to retroactively take an RMD for 2022? And one for 2023?
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2023-11-17 16:56
No. The IRS has waived the penalty for missed annual beneficiary RMDs in this particular scenario for 2021-2023. When the IRS proposed Regs are finalized the chance that they would then require these RMDs to be made up is extremely remote. That said, if client does not take any distributions until 2031, unless the balance is quite small, the lump sum distribution in 2031 will probably spike their marginal rate in that year. It is expected that the final Regs will require resumption of annual RMDs starting in 2024, which will of course be larger due to not having taken any voluntary distributions until then. And if the client has their own IRA or employer plan for which RMDs are about to begin, it may save tax dollars to drain the inherited IRA before their own RMDs start. Of course, the balance of each account should drive that decision.