Proposed new RMD rules
I am sure you’ve received a ton of questions on this. I just got off a tax planning seminar. All I kept hearing were the proposed new rules that got introduced in February 2022. I did not hear anything being concrete. I know it applies to Individuals who inherited an IRA after January 1, 2020, where the decedent was at their RBD date.
If I inherited an IRA after 1/1/20 and the decedent was at RBD, do I have a mandatory RMD or is it still being discussed?
Permalink Submitted by Alan - IRA critic on Tue, 2022-10-04 18:50
It was proposed to require annual RMDs in this situation, but this is being contested by many. If this proposed provision is adopted anyway, the IRS will have to decide how to handle 2021 and 2022 RMDs since 2021 is over and 2022 is about to be. There are several other seemingly over complicated provisions also being contested as well.
Permalink Submitted by Robert Roselli on Tue, 2022-10-04 19:28
Can I tell my clients to hold off? It seems ridiculous to impose a 50% penalty for those that don’t take it when the rule isn’t official or the tables we’ll need to use to figure them out.
Permalink Submitted by Alan - IRA critic on Tue, 2022-10-04 20:49
Yes, they can hold off if they are under the 10 year rule. Worst that might happen is that they would have to make up any missed RMDs, but they could file a 5329 to have the penalty waived. That said, even if they did not have to take annual RMDs, some of them would benefit from taking a distribution each year to avoid facing the taxes on a large lump sum distribution late in the 10 year period.