RMD post 2020
Non-spouse beneficiary (SON) of deceased that died in 2020 and deceased had already started RMD pre-death. The son did not take distributions in 2021, 2022 and 2023. Son was under the assumption that he did not need to take distribution during the 10 year period as long as he took entire distribution before the end of the tenth year. Because many beneficiaries were under the same assumption the IRS has suspended any penalties for failing to take distribution each year.
Question is, when taking distributions in 2024 and beyond through the end of the remaining 7 years does he simply divide the account balance at the end of 2023 by 7, 6 in 2025, 5 in 2026 and so forth to 2030, or does he need to make catch up distributions for 21, 22 and 23 for his 2024 RMD?
Permalink Submitted by Alan - IRA critic on Fri, 2024-01-05 16:39
The IRS has not clearly stated that catchup distributions will not be required, but no one expects that to be part of the Regs when finalized. With no RMDs in 2021-2023, the inherited IRA will just be drained faster through 2030. Son should use the new 2022 RMD tables to determine what his divisor would have been in 2021, then reduce that divisor by 3.0 to determine the 2024 beneficiary divisor, then another 1.0 each year thereafter. Most likely, the IRS will finalize the Regs before September, and if they don’t they will probably end up waiving 2024 as well. Nonetheless, the son should consider taking voluntary distribution to avoid a lump sum distribution in 2030 that may spike his marginal rate that year.
Permalink Submitted by John Holden on Fri, 2024-01-05 18:52
So since 7 years remain he should just divide the 12/31/23 by 7, 12/31/2024 by 6 and so forth thru 2030
Permalink Submitted by Alan - IRA critic on Fri, 2024-01-05 21:27
Correct, if he wants to roughly equalize the distributions over those 7 years. He is probably young enough that these amounts would exceed the annual RMD, but if he is pushing 80 they might fall short.