Inherited IRA RMD 2023

Forum|Forum|2 years ago
October 25, 2023
2 replies
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My husband has an inherited traditional IRA from his mom who died in 2021. She was 89. He did not take any RMD in 2021 and 2022. Does he have to take RMD in 2023 or can he do it in 2024?

Anonymous_

Level 15

@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

Opus 17

Level 15

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.

Anonymous_

Level 15

@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?~~

Opus 17

Level 15

@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

https://www.forbes.com/sites/kristinmckenna/2023/07/19/beneficiaries-of-inherited-iras-get-more-rmd-relief---for-now/

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.