Beneficiary RMD question

Submitted by timothy corrigan on Tue, 2022-12-27 00:57

Hi – my mother died in December 2020. I inherited her IRA (along with my siblings), and the beneficiary IRA account was established in mid 2021. If I follow the IRS instructions, the value of my beneficiary IRA at the end of 2020 was Zero. Which would seem to indicate that the RMD from this IRA for 2021 would be Zero. For 2022, the computation is relatively simple.

I appreciate your feedback in advance.



Submitted by Alan - IRA critic on Tue, 2022-12-27 01:37

  • You are probably subject to the 10 year rule, but even if mother passed after her RBD and annual beneficiary RMDs will be required, the IRS has waived them for 2021 and 2022 because they have not been able to finalize the new Secure Act Regulations. If mother passed prior to RBD, you will not have to take annual RMDs at all, just drain your inherited IRA by the end of 2030.
  • Therefore, you did not have to take a 2021 beneficiary RMD, but if you did it would be based on your share of her IRA balance on 12/31/2020. You also do not have to take a 2022 beneficiary RMD but as you indicated if you did the computation would be simple. 
  • If the IRS Regs become final in 2023 and remain as proposed by the IRS in Feb, 2022, and if mother passed after her RBD, your 2023 beneficiary RMD divisor would be determined using the new 2022 single life table. Look up the divisor based on your age at the end of 2021, and subtract 2.0 from that divisor for your 2023 divisor. 
  • If mother’s DOB was prior to 7/1/1949, she passed after her RBD and you would have have to start beneficairy RMDs in 2023.
  • Note that even if you do not need to take annual RMDs, you might want to take partial distributions anyway to avoid a tax spike at the end of the 10 years.


Submitted by timothy corrigan on Wed, 2022-12-28 01:57

Thank you for your reply.  I made sure that Mom took her 2020 RMD before her death.  My understanding is that I have to take RMDs starting in 2023 – with a catch up in 2023 for 2022.  Should I just take out a 10 year even amount such to get the Beneficiary IRA to $0 by 2030?   I plan on retiring in 2024 and paying the tax in 2023 and 2024 isn’t a concern.  Part of me thinks it might be beneficial to drain this account in 2023 and 2024 and move the money to a Roth and pay the tax out of pocket, that way any future appreciation will be tax free.  Thoughts?



Submitted by David Mertz on Tue, 2022-12-27 01:46

By operation of law, you obtained a beneficial interest in the IRA upon the death of your mother, so your 2021 RMD was based on your proportionate share of the 2020 year-end balance, not zero.  However, because of the confusion the IRS generated regarding whether or not a beneficiary would be required to take annual RMDs under the 10-year rule created by the SECURE Act, the IRS waived the penalty for failing to take the 2021 and 2022 RMDs as beneficiary under the 10-year rule.



Submitted by timothy corrigan on Wed, 2022-12-28 02:00

It sounds like in 2023 I have to make a catch up for 2021 and 2022 and the normal for 2023.  Which is fine.  Is the minimum still determined by the same formula even though the account has to be zero by 2030 year end?



Submitted by Alan - IRA critic on Wed, 2022-12-28 02:50

  • There was no 2020 RMD as they were waived for everyone by the CARES Act. As for the 2021 and 2022 RMDs having to be made up in 2023, that’s possible but unlikely.  The IRS should clarify this with the final Regs. While you will probably have to take the 2023 RMD, if you are working into 2024 you would probably only take out the minimum until you retire so that your taxable income would be equalized over the remainder of the 10 years.
  • Once you are retired, unless a spouse is still working, you cannot make regular Roth contributions any longer, and you cannot convert an inherited IRA. But if you have traditional IRAs, you could convert them and use the inherited IRA distributions to pay the taxes. And if you are not maxing out any workplace pre tax plans before you retire, you could take more out of the inherited IRA now and use those distributions to max out your pre tax retirement plans. The taxable income would offset, and you would be adding to plans that would last over your lifetime by using funds from a plan that only lasts 10 years.


Submitted by timothy corrigan on Wed, 2022-12-28 23:57

Given that the Inherited IRA needs to be zero by 2030 year end, it would seem like it would make sense to do a back door Roth for 2022 before 4/15/23, and another for 2023, then another for 2024.  Your point on not being able to make Roth contributions once I don’t have earned income is well taken, thank you.  I am not concerned about funding the tax bill pre retirement out of pocket.  I am scheduled to have a chat with my financial advisor on 1/4/2023, this will be a topic for discussion.  Happy New Year!



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