Do I have to take a RMD from an inherited IRA ? My mothe rdied in 2020 at age 92 and was taking RMD's from her IRA.

[hgtaber]

She passed in November 2020 and I did not take a RMD in 2021 or 2022 as I thought I could elect the 10 year option. However, some are saying I do not qualify for the 10 year and need to take RMd. Is that correct?

[rjs · Accepted solution]

In your situation the 10-year rule is not optional. It's required. You must withdraw all the money from your inherited IRA within 10 years. (To be precise, you must withdraw it by December 31 of the year containing the 10th anniversary of your mother's death.) You must also take an RMD each year. However, the IRS has announced that they will not impose penalties for not having taken RMDs in 2021 and 2022 because there was a lot of confusion about the new RMD rules. I believe they are also going to suspend penalties for 2023, but since you have to empty the IRA by 2030, you might as well get started.

[dmertz]

Yes, the IRS has similarly waived the penalty for not taking the 2023 beneficiary RMD under these circumstances because they will not release the final regulations before 2024.  As rjs said, because the IRA must be emptied by the end of 2030 you might want to spread the income out relatively evenly so that you do not end up paying higher taxes with a large distribution in 2030 when the IRA must be fully emptied.

[Opus 17]

The people you are talking to are confused, because the rules are confused.

You must follow the 10 year rule.  However, the 10 year rule also includes an RMD requirement in addition to the requirement to empty the account within 10 years.  As mentioned, this is a new rule and you won't be penalized yet, but that's where the confusion comes from. 

[fanfare]

"the 10 year rule also includes an RMD requirement in addition to the requirement to empty the account within 10 years"

@Opus 17 

This RMD requirement  applies only if the owner had already needed to take RMDs.

[fanfare]

when you are subject to the 10-year liquidation rule for newly inherited IRAs,
to spread the tax impact most evenly over the ten years, and regardless of the Year-End Value, 
your divisor should be :10,9,8 . . . 2, 1
OR,    11 - N where N is the number of the distribution year. (Beneficiary RMDs start in the year after the year of death)

if the owner died in 2020, the beneficiary would have to fully distribute the plan by December 31, 2030. which is the tenth distribution year.
the amount to distribute is 1 / 1 or 100%.

In the eighth year you would take out one third of the IRA, there being three years to go.
If you are a young beneficiary, or even not so young, this rule would generate much larger RMD than the RMD based on Pub590B formulas.

At a very high age, the Pub590B formula will overtake this calculation and require a larger RMD in the beginning.

@hgtaber 

[rjs]

---

@fanfare wrote:

This RMD requirement  applies only if the owner had already needed to take RMDs.

---

@fanfare  The original question stated that the deceased IRA owner was 92 years old and was taking RMDs. So the RMD requirement clearly applies to the question being discussed.

[rjs]

---

@fanfare wrote:

If you are a young beneficiary, or even not so young, this rule would generate much larger RMD than the RMD based on Pub590B formulas.

---

@fanfare  Not every distribution from an IRA is an RMD. RMD is a Required Minimum Distribution. If a distribution is more than the required minimum, as determined in Pub. 590-B, then the amount above what Pub. 590-B requires is not an RMD. It's just a distribution. Your rule will generate larger distributions, but not larger RMDs. The required minimum doesn't change.

[fanfare]

For you, I will change text "much larger RMD" to "much larger distributions"

My other comment was directed to Opus 17 who, as I read it,  implied an RMD is always required.

@rjs 

[hgtaber]

Thanks very much, just what I needed,