Inherited RMDs
I have a client who inherited an IRA in 2020. At that time it was just the 10-year rule without clarification that annual RMDs were needed. Now that we know there should be RMDs, is there anything we need to do about not having taken distributions in 2020, 2021, and 2022? We have taken a distribution in 2023 but I’m wondering if we should take some out so they don’t get penalized. It’s a client with already high income so we were going to delay distributions until retirement (1-3 years).
Permalink Submitted by Alan - IRA critic on Mon, 2023-11-27 21:01
There were no 2020 RMDs, and the IRS has waived the penalty for 10 year rule beneficiaries for 2021-2023 if the decedent passed after RMD. The 2023 distribution cannot be rolled back once distributed. The IRS expects to issue the final Secure Acts Regs in 2024, so annual RMDs will probably be required starting in 2024 with the inherited IRA being drained by the end of 2030. NOTE: If the IRA owner passed prior to RBD, there are no annual RMDs required in years 1-9 of the 10 year rule.