Inherited IRA RMD’s for 10-year rule

Submitted by Michael Kordas on Wed, 2023-01-25 20:41

It appears that the IRS has not given detailed instructions on how a beneficiary of an IRA, subject to the 10-year rule, should take RMD’s for year 1-9. Am I correct on this?

I see Ed has given guidance for beneficiaries of the IRA 10-year rule to take RMD’s based off of the beneficiary’s life expectancy, just like a stretch IRA, for years 1-9. Should we take Ed’s word for this? My office would like to avoid planning RMD’s for clients without exact instructions from the IRS. There is a possibility we do something that is incorrect for a client prior to the final guidance from the IRS.

Does this make sense or has the IRS given exact detailed instructions on the RMD rule yet?

Thank you



Submitted by Alan - IRA critic on Wed, 2023-01-25 20:52

The regs remain in the proposal stage, so there is probably a small chance that the IRS will relent on RMDs within years 1-9 for beneficiaries of owners who passed after their RBD. It might make sense to delay the 2023 RMDs until the Regs become final, but there is huge pressure for the IRS to conclude this very soon, so your wait should not be much longer.  The IRS cannot even publish Pub 590 B for 2022 until this is resolved. That said, many beneficiaries will benefit from spreading the income over all 10 years instead of a large distribution in year 10.

Submitted by Roselyn Siino on Mon, 2023-08-21 23:04

How should non-eligible designated beneficiaries subject to the 10 year rule calculate their RMDs for years 1-9? Based on the beneficiary’s own life expectancy? I know that the IRS issued a notice in July that missed RMDs for 2023 would not be subject to penalty but if the non-eligible designated beneficiary wants to take RMDs for years 1-9 and wants to start now, how do they calculate the specified RMD? Would it be based on beneficiary (new owner) life expectancy or original owner life expectancy?

Submitted by Alan - IRA critic on Tue, 2023-08-22 00:38

  • Annual RMDs within the 10 year rule or RMDs for EDBs mostly follow the old rules. For most such beneficiaries they would use their own LE for the year following the year of the owner’s death, but if separate inherited IRA accounts are not established by the deadline, the age of the oldest remaining beneficiaries applies.
  • If the beneficiary is older than the decedent who passes on or after their RBD, the beneficiary is an EDB and can use the longer LE of the decedent, but there is a new proposed Reg that requires such a beneficiary to drain the inherited IRA by the year that their own divisor would reach 1.0 or less. In this situation two ages must be tracked.
  • If no annual RMDs are not required in years 1-9 due to the owner passing prior to RBD, any distributions taken are not RMDs, just voluntary distributions. If the beneficiary wants to even out the distributions over 10 years (1/10, 1/9, 1/8 etc), in most cases they would have to take out more than what the RMD would have been using their LE. 
  • Yes, the IRS proposed Regs are still not final, likely due to many more  complications than the much discussed 10 year rule issue. 

Submitted by Roselyn Siino on Tue, 2023-08-22 02:05

So for Non EDB’s the 10 year rule would be based on the beneficiary’s life expectancy table? Which table is used to calculate RMDs for years 1-9?

Submitted by Alan - IRA critic on Tue, 2023-08-22 02:15

The single life table divisor for the age of the beneficiary in the year after death applies, then that divisor is reduced by 1.0 for each year thereafter.

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