A recent publication by Ed Slott (American College) states that Non-Eligible Designated beneficiaries(NEBDs) must empty out the contents within 10 years and that there is no requirement to take an annual RMD. Another Slott article says that RMD’s must be taken annually.
Please clarify.
Same rules? 10 Year for non- spouse even if RMD had been started? Meaning RMDs can stop and the 10 year can be at descretion of person inheriting?
The 10 year rule is mandatory for non spouse beneficiaries who are not “eligible” designated beneficiaries (spouse, disabled, minor child of taxpayer, or non more than 10 years younger). There are no annual RMDs, but to prevent a large lump sum distribution in year 10, many people will choose to take annual partial distributions anyway. The Secure Act only applies to deaths occurring in 2020 and later (2022 for govt plans). For deaths prior to these years, the former LE RMDs will continue.
Permalink Submitted by Alan - IRA critic on Mon, 2021-05-10 14:42
The IRS released Pub 590 B in March and incorrectly stated that annual RMDs were required within the 10 year rule. Ed issued a Notice of surprise at this. Shortly thereafter the IRS admitted that they made an error and that such annual RMDS were NOT required as everyone expected in the first place. Therefore, the recent publication clarified this, and the earlier one can be ignored. There are NO annual RMDs required under the 10 year rule.
Permalink Submitted by Patrice Konarik on Tue, 2021-05-11 17:26
Did you indicate there is a new Pub 590b released after the original was posted on March 29, 2021 to clarify the 10-year rule? I accessed the IRS website and haven’t seen a later revison.
Permalink Submitted by Alan - IRA critic on Tue, 2021-05-11 18:27
No, the IRS has not revised the 590 B, and that may take awhile. The IRS has apparently confirmed this error through some spokes person, but I have not seen any official Notice to that effect. Not sure what they will do about the 590 B.