Beneficiary IRA
Non-Spouse beneficiary inheriting an IRA. More than 10 years younger, so client will be subject to 10 year rule. Original owner was 85, taking RMD’s.
I am looking for confirmation on the RMD rules.
Original owner did not take RMD for 2023. Original Owner passed away in 2023. How is the RMD handled in 2023? Does original owner RMD need to be taken? Or does RMD for 2023 need to be calculated based on inherited IRA owner’s life expectancy.
Permalink Submitted by David Mertz on Thu, 2023-04-20 14:45
The by the end of 2023 the beneficiary must complete the decedent’s 2023 RMD by obtaining a distribution of the same amount that the decedent would have been required to take had they lived. This is generally done after a trustee-to-trustee transfer of the IRA to an inherited IRA maintained for the benefit of the beneficiary. Beneficiary RMDs will begin in 2024 using Table I based on the beneficiary’s age in 2024, reduced by 1 each subsequent year, and the inherited IRA must be fully distributed by the end of 2033. It might make sense for the beneficiary to take more than the RMD each year to avoid having to take a large distribution in year 10 that could result in taxation in a higher tax bracket. Tax rates are also scheduled to increase in 2026.