Retirement tax questions
@kevermurray wrote:
I appreciate the advice on how to level out my income, but that is not what I meant to ask. I meant to ask if IRS will change how most sites (including IRS sites) have interpreted the "10 year rule" as not having to take any out each and every year before the 10 years are up. It seems cruel to me on how the IRS is leaving this insufficiently explained for the last 2 years.
As I said, there is a proposed rule to required RMDs every year. Federal rulemaking is a long and complicated process and can take several years. (I'll post an info graphic at the bottom). In this case, proposed doesn't mean "we're thinking about maybe doing this", it means, "this is 99.999% going to happen after we trudge through miles of red tape."
Then once the rule is published (as a regulation in the Code of Federal Regulations), the IRS must update any forms, publications, instructions, and audit manuals impacted by the new rule. This is obviously another layer of bureaucracy as someone has to write the document, someone else has to review it, and who knows how many other layers of review before someone takes responsibility and signs off on the change.
The bottom line is, RMDs will be required for IRA beneficiaries under the 10 year rule. The rule has been in process since before March 2021, even if you only found out about it now.
The IRS issued a notice earlier this year clarifying that, regardless of when the rule takes final effect, the IRS will waive any penalties for missing the RMD for 2021 or 2022.
https://www.irs.gov/pub/irs-drop/n-22-53.pdf
