Inherited IRA RMD requirements?

Submitted by Amanda Minter on Tue, 2022-11-15 23:18

Still confused…

Situation.
Client lost her father in 2021. He was taking RMDs. I believe she is required to continue the RMDs years 1-9 with full distribution by end of year 10, 2031 in this case. Am I understanding correctly?

And if the father was not taking RMDs, the daughter would not be required to take RMDs but must fully distribute the account by end of year 10?

in either case the age of the beneficiary (other than the <10 years younger exception for EBDs) does not matter... can be 30 or 90 and rules above would be the same?

Last, the IRS then ruled on not accessing the 50% penalty for missed RMDs in 2021 and 2022, which “tells” people you may not have to take the RMD in 2022 as there is no penalty if you do not?

Am I understanding this all correctly?



Submitted by Alan - IRA critic on Wed, 2022-11-16 01:40

  1. Question 1, that is correct.
  2. Yes, 10 year rule with no annual RMDs in most cases. But note that “was taking RMDs” is not the exact criterium. To be specific the difference is whether he passed prior to or on or after his required beginning date. That date is 4/1 of the year following the year he reached or would have reached age 72. In addition, if the daughter is a minor, they are an EDB with annual RMDs until age 21, then the 10 year rule kicks in and the annual RMDs cease. Or if daughter is disabled, they are a permanent EDB with no 10 year rule.
  3. Last Q – the IRS waiver of penalty for 2021 and 2022 indicates that no such RMD need be taken, but does not indicate one way or another whether these RMDs are waived, or just postponed until 2023. The IRS does not want to receive thousands of 5329 forms requesting a penalty waiver.

Submitted by Jay Wiedwald on Wed, 2022-11-16 07:35

The response to Question 1 was that the original poster was correct, RMD’s need to be “continued”. But it’s not clear to me whether the beneficiary’s RMD is based on their age or the age of the deceased. Which is it?

Submitted by Alan - IRA critic on Wed, 2022-11-16 16:28

The beneficiary RMD is based on the beneficiary’s age, as it’s obvious that the beneficiary is younger than their father. However, if the beneficiary was older than the IRA owner (eg an older sibling), the beneficiary RMD could be based on the decedent’s age in 2021 and the 10 year rule would not apply since sibling would be an EDB.

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