topic I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now? in Retirement tax questions

I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

kevermurray — Tue, 10 Mar 2026 07:25:21 GMT

Even IRS's proposed form 590-B for 2022 seems to have conflicting wording. I am a designated beneficiary.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

Opus 17 — Fri, 09 Dec 2022 19:02:26 GMT

You are not an "eligible designated beneficiary," so you have to use the 10 year rule.

Under the rules created in 2019 as part of the retirement security act (forget the exact name), you must withdraw the the account and spend it out within 10 years.

Additionally, if your mother did not take her 2020 RMD before she died, then you were required to take it and pay the tax (in 2020). If you did not do that in 2020, there may be substantial penalties at this point and you may want to contact a tax advisor to help you.

Then, there is a new proposed rule that owners of beneficiary IRAs under the 10 year rule must also take an RMD each year. I don't think the rule is final, but you probably should take the RMD as if the rule was final, because it could be finalized at any time.

@dmertz ?

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

dmertz — Fri, 09 Dec 2022 20:34:42 GMT

In addition to what Opus 17 said, since the IRA must be drained by the end of 2030, you'll likely want to take out more than the RMD each year so that you do not get a big spike in income in 2030 when any remaining amount must be distributed.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

NCperson — Fri, 09 Dec 2022 21:59:15 GMT

@kevermurray you are required to take RMDs for each of the 10 years after your mother's death (so 2021-2030).

That includes 2021 and 2022.

However, with all the confusion over implementing this 10 year rule, the IRS said there is no penalty for not taking the RMD in 2021 and 2022. So if you don't - no harm, no foul.

But from a planning perspective, while it sounds great to take the minimum each year and not do it this year (since there is no penalty), that can leave you with a substantial 'balloon' in 2030.

So what others have suggested on these boards is attempt to smooth the distributions so there isn't a balloon in year 10. So in 2022, take 1/9 of the 12/31/21 balance. In 2023, take 1/8 of the 12/31/22 balance, etc....

depending on your tax situation you may be able to be even more aggressive than that without moving to a higher tax bracket. If you are going to be on Medicare during these 10 years, there is also something called "IRMAA" which increases Medicare premiums based on your gross income (and those IRA distributions are part of the gross income as is your RMD if your turn 72 prior to 2030 and your social security income) - think of IRMAA as a 'Phantom Tax". it's a reason, again based on your income situation, to be more aggressive than RMD during these remaining 9 years,

Might be worth sitting down with a financial planner to figure out the best strategy - it's not necessarily for the faint of heart and can be quite complex to figure out the best way to minimize the tax bite.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

Opus 17 — Fri, 09 Dec 2022 22:11:37 GMT

We do have to be careful about making too many assumptions. For example, suppose the taxpayer is currently contributing $1000/month to their 401k. If they are over age 50 (mom was 83) they could increase their contributions to $27,000 per year (tax deductible), and make up the hole in their take home pay by withdrawing $1000 per month from the beneficiary IRA. The increased 401k deduction would offset the tax from the IRA, so this would allow them to "move" the beneficiary IRA into the 401k and defer the taxes until they withdraw from the 401k. (At least for however much room they have under the 401k cap.)

Or, if the taxpayer is close to retirement, they could defer most of the IRA withdrawals until they retired. For example, retire at age 67. Delay social security for 3 years, and live off the IRA. They would get a higher SS benefit when they start taking it, and would pay lower taxes on the IRA withdrawal since it wouldn't be taxed on top of their wages.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

NCperson — Fri, 09 Dec 2022 22:52:58 GMT

@Opus 17 -

As a member of the Baby Boom generation, we have been conditioned to "defer, defer, defer' money into our 401(k)s and IRAs, but that can create a 'time bomb' where the income streams created by pensions, RMDs and Social Security leaves one paying IRMAA for the rest of our lives. That is exacerbated by those who are inheriting these non-beneficial IRA's from their parent's passing and the new 10 year rule.

attempts to defer even more money (e.g. $27,000 per year in the example) can come back to haunt with a higher effective tax rate later when incorporating the impact of IRMAA..

In the short term, the example can make a level sense, but it the long term, it may not.

this is an excellent series of the issue:

https://www.kiplinger.com/retirement/retirement-planning/605109/is-your-retirement-portfolio-a-tax-bomb

it is complicated and not for the faint of heart

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

kevermurray — Sat, 10 Dec 2022 00:29:46 GMT

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.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

Opus 17 — Sat, 10 Dec 2022 01:11:15 GMT

@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

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

kevermurray — Sat, 10 Dec 2022 02:39:20 GMT

99.999% is a pretty high percentage. I am trying to match that prediction up with the wording in a draft of form 590-B for the tax year 2022, published 12/9/22, linked here: https://www.irs.gov/pub/irs-dft/p590b--dft.pdf

The first 2 paragraphs on page 10 state:

"10-year rule. The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death. For example, if the owner died in 2022, the beneficiary would have to fully distribute the IRA by December 31, 2032. The beneficiary is allowed, but not required, to take distributions prior to that date.
The 10-year rule applies if (1) the beneficiary is an eligible designated beneficiary who elects the 10-year rule, if the owner died before reaching his or her required beginning date; or (2) the beneficiary is a designated beneficiary who is not an eligible designated beneficiary, regardless of whether the owner died before reaching his or her required beginning date. "

But then the example at the bottom of that page 10 seems to contradict the above paragraph. What kind of percentage do we put on those paragraphs being in the final version of form 590-B?

I'm worried that TurboTax software will not encompass the exceptions to fines that are in the complicated wording of that pdf file, which to me looks less official than a 590-B draft, and was certainly published before the 590-B draft.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

NCperson — Sat, 10 Dec 2022 03:52:32 GMT

@kevermurray - the language you posted is consistent with what we have all been repeating.....

for designated beneficiaries (to keep it simple - anyone who inherits the IRA other than the spouse) have to liquidate the IRA in 10 years. That is rule #1.

But there is a 2nd rule regarding RMDs:

if the Owner died before RMDs were required, then there is no RMD requirement of the beneficiary. Just liqudate it by the 10th year is the only requirement..

"10-year rule. The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death. For example, if the owner died in 2022, the beneficiary would have to fully distribute the IRA by December 31, 2032. The beneficiary is allowed, but not required, to take distributions prior to that date

if the Owner died AFTER RMDs were required, then not only must the IRA be liqudated in 10 years, there is an ongoing RMD requirement during those 10 years!

The example on the bottom of page 10 says the brother is 73, so he was subject to RMD, so the brother who inherited the IRA is also subject to RMD.

if the example was the brother was 71 (and not subject to RMD), the the brother who interited the IRA would still need to liquidate the IRA in 10 years, but have no RMD requirement along the way

is that the nuance that is throwing you?????? Owner's age at time of death and whether he was already subject to RMDs or not????

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

NCperson — Sat, 10 Dec 2022 04:03:03 GMT

@kevermurray - as a little background.... a number of folks who inherited these IRA recently (or are going to over the next years) were 'ticked off' that the SECURE ACT reduced the time to liquidate these inherited IRAs from the beneficiary's remaining life expectancy to just 10 years.

Then the IRS placed even more 'salt on the wound' by saying that if your parent passed away after they were obligated to RMDs, not only do you only have 10 years to liquidate the IRA, but you have your own RMD obligation to content with!

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

kevermurray — Sat, 10 Dec 2022 04:31:54 GMT

The part of the 590-B rough draft that is throwing me is the 2nd paragraph on page 10. Please read it. It states:

"The 10-year rule applies if (1) the beneficiary is an eligible designated beneficiary who elects the 10-year rule, if the owner died before reaching his or her required beginning date; or (2) the beneficiary is a designated beneficiary who is not an eligible designated beneficiary, regardless of whether the owner died before reaching his or her required beginning date. "

Note the last sentence just above, beginning with the word 'regardless'. How do you interpret that as having to do yearly RMDs? Or to emphasize, should I have more than one ?????????

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

fanfare — Sat, 10 Dec 2022 05:45:03 GMT

The IRS Pub 590-B is not consistent with the IRS clarification.

For this reason IRS agreed to waive penalties on SECURE-act inherited IRAs for those who don't take a 2022 RMD. The clarification will not be enforced for 2022.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

Opus 17 — Sat, 10 Dec 2022 06:22:57 GMT

Under the new regulations, you will be subject to RMDs starting in 2023. Per notice 22-53, you will not be penalized if you do not take an RMD for 2022. So this is a bit pointless when thinking about your 2022 tax return. You don't have to take an RMD unless you want to.

Your confusion stems from the fact that the 2022 draft version of publication 590-B does not include the RMD requirement for the 10 year rule (as best I can tell from reading it carefully). The publication follows the current regulations rather than the proposed regulations. This quote may help to explain.

When IRS released Publication 590-B for 2020 in spring 2021, there was a section in the publication explaining the 10-year inherited IRA withdrawal rule. In its explanation, the IRS implied that there would be RMDs during the 10-year period, which, in fact, was not correct.

The IRS recently [in 2021 when this article was written] revised Publication 590-B to clarify and to correct its position on the 10-year rule. In particular, IRS states that there are no RMDs required provided that a non-eligible designated beneficiary's inherited IRA is withdrawn in its entirety by the end of the 10-year anniversary of the original IRA owner’s death.

https://www.myfederalretirement.com/inherited-ira-10-year-rule/

Pub 590-b currently says

"The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death. For example, if the owner died in 2021, the beneficiary would have to fully distribute the IRA by December 31, 2031. The beneficiary is allowed, but not required, to take distributions prior to that date."

That reflects the regulations that exist as of today (12/9/2022) as well as the regulations that existed in October when notice 22-53 was released. If you really want to get technical, you will need to read a lot of regulations, because the RMD rules are written into the regulations for workplace retirement plans (section 401), and then the IRA regulations (section 408) reference back to the workplace regulations (the IRA regulations say "you must follow section 401" rather than restating the rules in plain language). Here is a version of the notice, highly edited and annotated for clarity.

The Treasury Department and the IRS published proposed regulations regarding RMDs under section 401(a)(9) of the Code and related provisions in the Federal Register on February 24, 2022 ... which provided that the regulations, when finalized, would apply beginning with the 2022 distribution calendar year. Along with other matters, the proposed regulations address issues relating to the new 10-year rule in ... the Code.

In order to satisfy section 401(a)(9)(B)(i), the beneficiary of an [IRA owner] who died after the [IRA owner's] required beginning date must take an annual required minimum distribution beginning in the first calendar year after the calendar year of the [IRA owner's] death. In order to satisfy section 401(a)(9)(B)(ii), the remaining account balance must be distributed by the 10th calendar year after the calendar year of the [IRA owner's] death...In order to satisfy both of those requirements, the proposed regulations generally provide that...annual RMDs must continue to be taken after the death of the [IRA owner] , with a full distribution required by the end of the 10th calendar year following the calendar year of the [IRA owner's] death.

The Treasury Department and the IRS provided a 90-day comment period for the proposed regulations. During that period, some individuals who are owners of inherited IRAs ... submitted comments indicating that they thought the new 10-year rule would apply differently than what was proposed in the proposed regulations. Specifically, commenters believed that, regardless of when an [IRA owner] died, the 10-year rule would operate like the 5-year rule, under which there would not be any RMD due for a calendar year until the last year of the ...10-year period...Commenters in those situations who are heirs or beneficiaries of individuals who died in 2020 explained that they did not take an RMD in 2021 and are unsure of whether they would be required to take an RMD in 2022. Commenters asserted that, if final regulations adopt the interpretation of the 10-year rule set forth in the proposed regulations, the Treasury Department and the IRS should provide transition relief for failure to take distributions that are RMDs due in 2021 or 2022...

IV. Guidance for Certain RMDs for 2021 and 2022

...

B. Guidance for certain taxpayers who did not take a specified RMD

To the extent a taxpayer did not take a specified RMD ... the IRS will not assert that an excise tax is due under section 4974.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

Opus 17 — Sat, 10 Dec 2022 06:19:57 GMT

@fanfare wrote:

The IRS Pub 590-B is not consistent with the IRS clarification.

For this reason IRS agreed to waive penalties on SECURE-act inherited IRAs for those who don't take a 2022 RMD. The clarification will not be enforced for 2022.

The current version of 590-B follows the current regulations, not the proposed regulations. (Which is technically proper, I suppose. If a state were to pass a law stating that on January 1, all highway speed limits were to be lowered to 50 miles per hour to save gas, they probably shouldn't be changing the signs in November.)

I suspect that there is another hidden draft version of 590-B ready to be published whenever the regulations become final (which as noted above, will be 60 days after their final publication in the Federal Register.)

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

NCperson — Sun, 11 Dec 2022 01:00:39 GMT

@kevermurray

<<Note the last sentence just above, beginning with the word 'regardless'. How do you interpret that as having to do yearly RMDs? Or to emphasize, should I have more than one ?????????>>

That paragraph is solely discussing who is subject to the 10 year rule and NOT who is subject to RMD.

let's try to break it down.

"The 10-year rule applies if (1) the beneficiary is an eligible designated beneficiary who elects the 10-year rule, if the owner died before reaching his or her required beginning date; or (2) the beneficiary is a designated beneficiary who is not an eligible designated beneficiary, regardless of whether the owner died before reaching his or her required beginning date. "

Here is the definition of an Eligible Designated Beneficiary (EDB):

The owner’s surviving spouse
The owner’s child who is less than 18 years of age
A disabled individual
A chronically ill individual
Any other individual who is not more than 10 years younger than the deceased IRA owner

A designated beneficiary is an individual (let's not worry about estate and trusts!) named as a beneficiary on a retirement account and who does not fall into one of five categories of individuals classified as an eligible designated beneficiary (EDB).

You are a "designated beneficiary" as you do not satisfy any of the requirements of an "eligible designated beneficiary"

Under (1), those that are in one of the 5 categories of "eligible designated beneficaries" have the OPTION to liquidate in 10 years but not the requirement if the Owner died prior to taking their first RMD.

Under (2), every other individual (the "designated beneficiaries") MUST liquidate in 10 years. And it doesn't matter whether the Owner (your mother) had begun taking RMDs or not.

does it make sense now? please post back

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

kevermurray — Sun, 11 Dec 2022 02:18:28 GMT

I read those two paragraphs at the beginning of page 10, and I read that under the 10 year rule "The beneficiary is allowed, but not required, to take distributions prior to that date." (The end of the 10 year period.) I interpret that as meaning RMDs are not required each year. If the IRS means to say that RMDs are required each year, it is not only not clear, but is is still deceptive. If they mean that RMDs are required each year, it seems like it would be easy to state, and a good place to do that would be in form 590-B.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

Opus 17 — Sun, 11 Dec 2022 02:58:00 GMT

@kevermurray

We already explained this.

1. The current regulation as of today, 12/10/2022, is that RMD‘s are not required for the 10 year rule.

2. As of today, both the current version of publication 590B (which is for the 2021 tax year) and the draft version of publication 590B for 2022, confirm that an RMD is not required under the 10 year rule. The publication follows the regulations as they exist today.

3. The IRS is weeks away from finalizing a new regulation that will require RMD‘s under the 10 year rule. Under the new regulation, you will be required to take RMD‘s beginning in 2023.

4. Even if the regulation is finalized before the end of 2022, you will not be penalized for failing to take an RMD in 2021 or 2022.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

kevermurray — Sun, 11 Dec 2022 03:37:01 GMT

Thank you. Your clarity is refreshing.

Re: I inherited an IRA from my mother in 2020, who was 83 when she died. Can I make use of the "10-year rule", and wait to make withdrawals? Or do I need to make an RMD now?

NCperson — Sun, 11 Dec 2022 04:13:48 GMT

@kevermurray - I found this an easy read.... and the example appears to fit your situation

https://www.morningstar.com/articles/1125762/who-does-and-doesnt-get-to-skip-rmds-under-the-new-10-year-rule