Inherited IRA RMD Plans Due to IRS Notice 2024-35

Submitted by T Poehler on Tue, 2024-11-19 12:22

Is this a reasonable strategy from a tax planning point of view?

I inherited four separate IRAs from my mother, who died in late 2023. I’m aware of the 10-year requirement for emptying inherited IRAs – by 2033 in my case. However, I’d like to delay starting RMDs from these until 2025, when I expect my income will be lower due to my plans to retire in mid-2025. I think it may be possible to do this, since the IRS is waiving penalties for not taking inherited IRA RMDs for one last year – 2024.

I’ve taken possession of three of the four IRAs. The remaining provider (TIAA) appears to require beneficiaries to set up a yearly RMD schedule, without taking into account current IRS rulings. The other providers have told me they will not automatically make RMDs, or force them to happen. Can financial providers/custodians force an individual who has inherited an IRA (from someone other than a spouse) to take an RMD each year?

If this is a valid strategy, I need to run it by a tax adviser. Would most CPAs know about this?



Submitted by Alan - IRA critic on Tue, 2024-11-19 12:55

As a 10 year rule beneficiary, you are not required to take a beneficiary RMD in 2024, although if mother passed after her RBD and did not complete her 2023 RMD before passing, you must complete that RMD by 12/31/2024.

Generally, an IRA custodian cannot “force out” a distribution. That said, TIIA does some things differently than the typical IRA custodian. You may need to notify them that you do not want any distribution in 2024. If they resist and disregard Notice 2024-35 you might tell them that you have already completed what would have been your total 2024 RMD from other IRA accounts also inherited from your mother.

Most CPAs should know these rules, although there are probably some who specialize in other areas.

If you were not the sole beneficiary, remember that the separate account deadline is 12/31/2024. And if mother passed prior to her RBD, you have just the 10 year rule with NO annual RMDs in years 1-9.

Submitted by T Poehler on Tue, 2024-11-19 13:30

My mother completed her 2023 RMDs from TIAA and with one other provider before her passing. At the two providers where she was unable to complete 2023 RMDs – one distributed her 2023 RMD equally to myself and my brother. The other sent a check in her name, which went into her estate. (My brother and I – her only heirs – were equally beneficiaries of all her IRAs). So all of her 2023 RMDs were satisfied.

My brother already took possession of his 50 percent share of my late mother’s TIAA IRA.

Does the separate account deadline mean I must take possession of my share of her TIAA IRA by 12/31/2024?

Submitted by Alan - IRA critic on Tue, 2024-11-19 15:22

If your brother established his separate inherited IRA account, since you are the only remaining beneficiary, you have also met the separate account deadline.

Submitted by T Poehler on Fri, 2024-11-22 11:25

If I tell TIAA that I already completed what would have been my total 2024 RMD from other IRA accounts also inherited from my mother, can they ask me to provide proof that I did so?

Submitted by T Poehler on Fri, 2024-11-22 16:03

TIAA seems very rigid about how they do things. The “beneficiary rep” basically just repeats their rules over and over. I talked to the CPA that has prepared taxes for my mother and myself about 2024-35. His take was “if you are sure you are not required to take a 2024 inherited IRA RMD, then don’t take on. He didn’t seem aware of 2024-35, but then again he may not have had a client ask him about it.

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