HEADLINE:
The IRS has postponed for 2024 required minimum distributions (“RMDs”) for non-spouse beneficiaries of inherited IRAs. Details here.
DETAIL:
In legislation passed by Congress in 2019 non-spouse beneficiaries of IRAs would need to zero out accounts within 10 years. It was interpreted to mean that no distributions could be taken for the first nine years (thus maximizing tax-deferral) with full distribution in year ten.
In February 2022 the IRS proposed rules mandating annual withdrawals during the 10-year period if the decedent (i.e. original account owner) had already been taking distributions.
Complaints followed from beneficiaries and financial-services companies over how to follow the new rules. As a result the IRS said it wouldn’t impose penalties for missing RMDs until the details could be finalized. In essence beneficiaries of inherited IRAs could skip taking distributions.
WHAT’S NEXT?
Who knows?! The IRS has kicked the proverbial can down the road several times. As of today RMDs will be required beginning in 2025. Presumably clarified proposed regulations will be issued. Stay tuned…