@krisandclint wrote:
Does he have to take RMD in 2023 or can he do it in 2024?
See https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
Also https://www.irs.gov/pub/irs-drop/n-22-53.pdf
2023
EDIT: Disregard - based on old IRS Notice
There are two different issues here—his mother's RMD for 2021 and his RMD for 2022 and 2023 follow two different sets of rules.
@dmertz , please check me.
1. If his mother was required to take an RMD in 2021 (was past her beginning age) and did not, then he was required to take it for her. Failure to do that would result in a penalty on his 2021 tax return. You will need to check what her RMD would have been, and whether she was drawing enough money in 2021 to cover the RMD or not. If an RMD was required and was not taken, I don't know any way to fix it now, other than file an amended 2021 return and pay the penalty.
2. Then, starting in 2022, your husband is required to take RMDs based on his life expectancy (again, assuming his mother was past her beginning year). He also follows the 10 year rule and must spend out the account within 10 years. However, the regulations for RMDs on inherited IRAs have not been finalized, so the IRS has waived any penalties for not taking the RMD for 2022 and 2023. That means your husband does not have to take an RMD for 2022 or 2023, has nothing to fix for 2022, but should plan to start taking RMDs in 2024.
@Opus 17 wrote:....That means your husband does not have to take an RMD for 2022 or 2023, has nothing to fix for 2022, but should plan to start taking RMDs in 2024.
Considering the IRS Notice states that RMDs would "apply no earlier than the 2023 distribution calendar year", would you not want to err on the side of caution?
@Anonymous_ wrote:
@Opus 17 wrote:....That means your husband does not have to take an RMD for 2022 or 2023, has nothing to fix for 2022, but should plan to start taking RMDs in 2024.
Considering the IRS Notice states that RMDs would "apply no earlier than the 2023 distribution calendar year", would you not want to err on the side of caution?
IRS notice 2023-54 waives penalties for failing to take an RMD in 2023 on inherited IRAs.
https://www.irs.gov/pub/irs-drop/n-23-54.pdf
For tax planning purposes, the husband may want to think about spreading out the withdrawals over the next 8 years, instead of taking a lump sum in 2031. This of course depends other income, tax rates, the amount of money involved, and so on. But at least for 2023, failing to take an RMD will not be penalized.
Opus 17 is correct. I'll post here my response to the duplicate question posted on another thread:
The regulations proposed by the IRS in 2022 require annual RMDs under the 10-year rule because the decedent died after their RBD, but due to the IRS anticipating that the regulations will not be finalized until 2024, the penalty for failing to take a beneficiary RMD under the 10-year rule has been waived for 2021, 2022 and 2023. Still, because the IRA will have to be fully drained by the end of 2031, it still might make sense to take a distribution in 2023 to spread the taxable income out over more years.
Your husband was also required to complete his mother's 2021 RMD if she did not complete it. If she did not complete her 2021 RMD, your husband can do it now and file a 2021 Form 5329 requesting waiver of the excess accumulation penalty.
Thank you so much for your posts! They are most helpful!!
Notice 2023-54 is the authoritative guidance. What the notice says is, "Final regulations regarding RMDs under § 401(a)(9) and related provisions will apply for calendar years beginning no earlier than 2024." The entire IRA industry has interpreted this as indicating that the IRS will not enforce the annual RMD requirement for beneficiaries under the 10-year rule until 2024. (Assuming that the final regulations with regard to this will be the same as the proposed rules, saying that this requirement in the final rules won't be enforced until 2024 implies that the rule won't be enforced in 2023.)