The rules around required minimum distributions (RMDs) from an IRA account have changed over the past few years, with the most recent change occurring in July 2023, when the IRS issued final regulations.
Prior to these final regulations and the SECURE Act 2.0, individuals had to begin taking distributions at age 72. As of 2023, the age to begin taking distributions has increased to 73, and it will be further pushed to 75 starting in 2033 due to the SECURE Act 2.0.
If an individual reaches age 73 in 2024, they must take their first RMD by April 1, 2025, with the second RMD due by December 31, 2025. Both distributions are dependent on the account balances as of December 31, 2023, and December 31, 2024, respectively.
Additionally, the SECURE Act 2.0 allows beneficiaries of inherited IRAs to take distributions over a 10-year period from the date of death if the death occurred after 2019. There are various rules depending on the beneficiary’s status.
If the beneficiary is the spouse, they may delay distributions until they themselves reach age 72, take distributions based on their own life expectancy, or follow the 10-year rule mentioned above.
If the beneficiary is not the spouse, they are required to follow the 10-year rule. The 10-year rule, as defined by the IRS, allows the beneficiary to empty the entire account by the end of the 10th year following the year of the account owner’s death.
Relief under Notice 2022-53 protects beneficiaries of an inherited IRA from the penalty for failing to take the RMD for 2021 and 2022.
Author: Lisa Sun, CPA | [email protected]
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