RMD calculation for Post 2020 Non-eligible Desig Bene

Submitted by JTG on Fri, 2022-06-10 13:52

I was on the CPA academy webinar last night but had to leave early. So I’m not sure how granular Ed got with examples of RMDs using the Feb 2022 proposed regs.

Client dies in 2021 aged 86, NEDB turns age 58 during 2022. I believe Single Life Expec for that person is 28.9 per IRS table. Assume Inherited IRA was $100,000 on 12/31/21. How is the RMD calculated for 2022 which is year 1 of 10? Am I correct it to use the age the bene turns in 2022?



Submitted by Alan - IRA critic on Fri, 2022-06-10 14:48

  • Providing the proposed IRS Secure Act Regs are adopted as issued, requiring beneficiaries of those who passed post RBD to take annual RMDs within the 10 year rule, you are correct that the divisor is 28.9 and based on beneficiary attained age in 2022. Beneficiary is also responsible for completing the client’s 2021 RMD if client did not do so before passing.
  • Since beneficiary RMDs will be far less than the annual distribution needed roughly equalize taxable income in each year and avoid a lump sum distribution in the 10th year, for most beneficiaries taking an annual RMD will not hurt them, and may well not be enough to still avoid a large distribution in year 10. 
  • As you can see, for the first 9 years the annual RMD is calculated exactly the same as it would have been prior to the Secure Act. Still, this provision is controversial and the IRS has received complaints about it from multiple retirement industry lobbying firms, so it may not survive the final Regs.


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