global Tax Are RMDs Required for Inherited IRAs in 2023? November 14, 2023 The inherited IRA rules and retirement plan rules are complex — and they’ve changed under recent legislation. How do RMDs factor in? We explore here. Here’s a sneak peek inside our whitepaper, Your Guide to Required Minimum Distributions (RMDs). Do you have to take RMDs from inherited IRAs? Under prior rules, you were allowed to gradually drain an inherited account over your IRS-defined life expectancy. So, depending on your age, you could potentially keep an inherited account open for decades and continue to reap the tax advantages. Plus, you had the option of passing inherited IRAs to later generations, allowing you to possibly defer taxes even longer. This so-called “stretch IRA” strategy was particularly advantageous for inherited Roth IRAs because qualified withdrawals from inherited Roth IRAs in those accounts are tax-free. The SECURE Act now requires most non-spouse beneficiaries to take RMDs ratably from accounts inherited from owners who died after 2019 within 10 years after the account owner’s death. The new 10-year rule applies regardless of whether the account owner dies before, on, or after his or her RBD. Are there exceptions? There are some exceptions to the inherited IRA and retirement plan rules for “eligible designated beneficiaries.” Examples include: The surviving spouse of the deceased account owner, A minor child of the deceased account owner, A beneficiary who’s no more than 10 years younger than the deceased account owner, orA chronically ill individual. Learn more in our whitepaper, Your Guide to Required Minimum Distributions (RMDs). Contact us to take the guesswork out of taking RMDs and for more details on what’s changed under recent legislation. We can help you comply with the rules and minimize any adverse tax consequences.
