Inherited IRA RMD's

[RWG1950]

I had thought that under the post 12-31-2019 rules, a non-eligible IRA beneficiary inheriting IRA proceeds after
this date would have up to 10 years to drain the inherited IRA account and not have to take RMD's along the way,
but IRS pub 590-B (p.p. 11-12) seems to state this differently, requiring such annual distributions.
Am I reading this wrong or are RMD's required during the 10 year period ?
Had received an e-mail from a well-read tax columnist alerting people to this issue.
Thanks for comments.

[Gene V]

I had thought that under the post 12-31-2019 rules, a non-eligible IRA beneficiary inheriting IRA proceeds after
this date would have up to 10 years to drain the inherited IRA account and not have to take RMD's along the way,
but IRS pub 590-B (p.p. 11-12) seems to state this differently, requiring such annual distributions.
Am I reading this wrong or are RMD's required during the 10 year period ?
Had received an e-mail from a well-read tax columnist alerting people to this issue.
Thanks for comments.

According to TTB page 13-23, only Eligible Designated Beneficiary could use the Stretch rule,
Non Eligible Beneficiary would use the 10-year rule.

My understanding is--if the decrease did not take their RMD in year of death, then the beneficiary would have to take it the first year and the remaining under the 10-year rule.

[RWG1950]

Thanks for your reply, but my post did not refer to the "stretch" issue you addressed.
Does a post 2019 non-eligible inherited IRA beneficiary have to take RMD's under the 10 year rule ?
It has been believed that this person could ignore RMD's as long as they drained the IRA by the end of the 10th year.
IRS has apparently recently issued something on this that is not found in TTB & appears to contradict the former.
One needs to read pages 11-12 in IRS pub 590-B to see this (not TTB).

[New York Enrolled Agent]

Thanks for your reply, but my post did not refer to the "stretch" issue you addressed.
Does a post 2019 non-eligible inherited IRA beneficiary have to take RMD's under the 10 year rule ?
It has been believed that this person could ignore RMD's as long as they drained the IRA by the end of the 10th year.
IRS has apparently recently issued something on this that is not found in TTB & appears to contradict the former.
One needs to read pages 11-12 in IRS pub 590-B to see this (not TTB).

RWG - you are correct - virtually every commentator ( including folks like IRA guru Ed Slott) believed the 10-year rule meant the beneficiary IRA had to be drained by the end of the 10th year. I think it’s fair to say most still feel that way. The Secure Act text doesn’t seem to support the IRS position.

IRS publications have no authority. Pub 590 has had bad interpretations before. The Bobrow Tax Court case confirms that. It would not surprise me to see a future iteration of the Pub will change the position. But that’s just my opinion.

I will note the Tax Court has often intoned “taxpayers who rely on IRS publications do so at their own peril”.

[Burke]

Interesting. But I would venture to say the 10-yr rule was not intended to vacate the annual RMD rule if it applied to an inherited IRA.

[New York Enrolled Agent]

Interesting. But I would venture to say the 10-yr rule was not intended to vacate the annual RMD rule if it applied to an inherited IRA.

IRS Surprises with Apparent Explanation of the SECURE Act 10-Year Rule | Ed Slott and Company, LLC (irahelp.com)

[New York Enrolled Agent]

A member of another message board posted this late this afternoon.


Good afternoon, all. It was brought to my attention that there were concerns with the IRS’s interpretation of the SECURE Act’s 10-year rule because of the following example on page 12 of Publication 590-B:

“Your father died in 2020. You are the designated beneficiary of your father's traditional IRA. You are 53 years old in 2021, which is the year following your father's death. You use Table I and see that your life expectancy in 2021 is 31.4. If the IRA was worth $100,000 at the end of 2020, your required minimum distribution for 2021 would be $3,185 ($100,000 ÷ 31.4).”

I reached out to IRS Chief Counsel for clarification, and they confirmed that the example is incorrect. The IRS is working on a correction and also working on updating regulations with SECURE Act changes.

Regards,

Charles G. Jeane
Assistant Chief Counsel for Tax and Employee Benefits Policy
SBA Office of Advocacy