Inherited IRA Distribution IRS Change
Any advice on being able to defer for 10 years versus an annual withdrawal based on the new IRS interpretation that came out yesterday? Should we start taking distributions this year or wait till later this year when full guidance may come out.
Permalink Submitted by Alan - IRA critic on Fri, 2021-04-23 14:17
I would wait until later in the year to see if the IRS confirms the Pub 590 B statements regarding LE RMDs within the 10 year rule. There is a decent chance that they messed up merging the old RMD regime into the Secure Act.
Permalink Submitted by Adman Gilly on Tue, 2021-05-04 08:51
IRS published 590-B after such a long time! If IRS do not repond/comment/correct, does that mean 10-Year rule interpretation as per their classis example – Continue with LE but liquidate everything in 10 years. That also means every year meet RMD amount else pay penalty!! Sounds ridiculous but blame IRS…
Permalink Submitted by William Tuttle on Tue, 2021-05-04 13:32
The IRS has already confirmed that example in Publication 590-B is in error. They will be issuing a correction. No date for the correction was given.
Alan’s advice is still spot on. Do not take any action based on that incorrect example. Wait for the correction.
Permalink Submitted by Adman Gilly on Tue, 2021-05-04 14:01
I wasn’t aware that IRS accepted the error. Hope they publish corrected 590-B before year end.
Permalink Submitted by Alan - IRA critic on Tue, 2021-05-04 16:04
It will be interesting to see if the IRS has put itself in the position of having to allow “would be RMDs”, much less beneficiary RMDs that are not rollover eligible, to be repaid to the beneficiary IRA by some deadline. Just what IRA custodians would rather not hear for the second year in a row. No doubt some beneficiaries have taken 2021 RMDs that are not required since Pub 590 B was published in late March, although for many the amount distributed may not be too different than the amount needed to equalize the distributions over 10 years and eliminate a huge tax bill in the final year.