There’s been a lot of confusion over the timing of required distributions when the beneficiary inherited a retirement account from someone who died AFTER starting their required minimum distributions (RMDs).

Many thought you could wait until the 10th year and take it out all at once as opposed to having a mandatory distribution each year, but the IRS thought differently. (Please note that taking it all at once might not be the right strategy for you, so be sure to work with your financial/tax team.)

It looks like we’ll have to wait until January 1, 2025 for the final regulations.

In the meantime, the IRS is waiving the penalty for SOME beneficiaries, not all, if you fail to take an annual distribution. It’s worth repeating that in most cases RMDs are required and there WILL be a penalty if you fail to take them, so please be sure to consult with your team of financial and tax advisors to make sure you know which rules apply to your particular set of circumstances.

You can read Ed Morrow’s article, “IRS Issues New Notice on Inherited IRAs” at wealthmanagement.com here, and you can read the official IRS Notice here.

This material is for informational purposes only and is not legal advice. Receipt and use of this information, by itself, does not create an attorney client relationship. The information provided in this post and the accompanying article and link speaks only to the information and guidance we have available as of the date of publication and is subject to change. We will continue to  post those updates via our website. 

As a convenience, this website provides links to various third-party websites. Such linked websites are not under the control of the Firm, and the Firm assumes no responsibility for the accuracy of the contents of such websites.