Inherited IRAs Under the 10 Year Rule IRS Update
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- Опубліковано 23 сер 2024
- If you are the named beneficiary of an IRA (Individual Retirement Accounts) or you own an IRA yourself and have named beneficiaries, this topic affects you. The SECURE ACT shortened the time period beneficiaries are allowed to delay taking money out and paying income taxes. With an update earlier this year, the IRS added more confusion to distribution rules for beneficiaries. This video goes over all of this.
Show Notes: cardinalguide....
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You guys are the best. Thank you for this update. Great work.
I like the way
your mind works.
Thank you.
Thank you, helped a bunch.
Oh this makes me want to scream I have 2 I have to deal with from 2020 and I have no idea what to do with them.
Always appreciated!
50% penalty on what? The full IRA total, on the amount that should have been taken out in year 1?
The 50% penalty is on the amount that should have been taken out
You mentioned the minimum distribution is 3 or 4%, where is the determined please. Is there a table for something that determines that percentage? I really do not want to take anything this year from an inherited IRA since the market is way down. Any guidance is appreciated. Thank you.
If the IRA owner died 2019 and before, stay on your same distribution schedule. If the IRA owner died in 2020, 2021, or 2022; you can skip RMD this year without penalty.
@@CardinalAdvisors Thank you for that advice. My mother died in 21 and we took her RMD for 21 and I told T Rowe to skip this year since the market was way down and I honestly thought I could defer as long as the account was zero in year 10. Hans corrected me a few weeks ago via email and then I watched your presentation today and I plan to skip this year and resume next but I would like to know if there is a table to determine the RMD after 22. I like that 3 or 4% distribution versus 10%. I know I am just pushing off the taxes but I plan to offset in later years with other tax strategies. You guys are the best and thank you.
@@CardinalAdvisors 2020 was the CARES Act, right? So we could take a pass because of that.
@@swilson464 You asked a good question, ,--' How the hell do we figure out what the 'Required Minimum Distribution' is?!. .. Yes, an answer would be nice.
This is a very helpful video. Fidelity has not been helpful on this. I'm dealing with this issue from a 2020 death, and I elected in 2020 to use the equal distributions over 10 year method to empty the inherited IRA. (I assumed the IRS would not allow waiting until year 10, so I'm not surprised by the regulations.) I'm simply dividing the inherited IRA distributions equally over 10 years and reducing regular IRA distributions by that amount, and adjusting for any increase or decrease in value. The distribution amounts are well in excess of the RMD amounts from the inherited IRA. That way the tax effect of the distributions from the IRAs are identical, and for my situation this works fine. But everyone has a different situation.
It would be helpful if there was a flowchart. Just saying
Does the Federal estate tax deduction only apply to Federal estate taxes paid, so if the estate is under the Federal estate tax exemption, there is no deduction? I'm asking because if a qualified retirement plan distributes to the estate as beneficiary, the estate pays 37% on that distribution. Is there any deduction the beneficiary can take for the 37% the estate paid on the distribution before it was divided up among beneficiaries of the estate?
The answer to your first question: It is the federal estate tax exemption, currently 12 million +, reduces or eliminates estate tax only. Doesn’t apply to income tax. The qualified retirement plan needs to have named beneficiaries who are people. The beneficiaries can stretch the income tax individually over 10 years. Avoid naming the estate as a beneficiary.
@@CardinalAdvisors Unfortunately, it's too late because the person died with the estate as beneficiary. The will names beneficiaries but some are in the highest tax bracket and would rather the estate pay the taxes on the qualified accounts than have to pay taxes at their own marginal rates.
Nice video. I fall into the non-eligible designated beneficiary category, inheriting an IRA from someone who died in 2022 and who was more than ten years older than me. I knew about the ten-year rule but until now thought I could delay taking distributions. From the info you have here, it looks like I'm required to take the RMDs starting in 2023. Have I got that right?
If the IRA owner died age 73 or later, you need to take an RMD in 2023
Chapters would have been great
After reading the IRS notice, it wasn't clear to me that owners of an inherited IRA could delay taking (without incurring a penalty) a 2022 RMD if a decedent had already started taking distributions before their death . Does the waiver only apply to situations where decedents had died prior to taking the RMDs?
Maybe I missed it. But does this 10 year rule effect existing inherented IRAs? My mother passed in 2009 and I’ve been taking an RMD since then. Do I now have 10 years to exhaust it. It’s substantial and large RMDs each year will boost my tax bracket. I made the mistake of taking a larger withdrawl than the minimum one year, and I’m still paying the price to the IRS and State tax board.
No. Only IRAs inherited 2020 or later.
@@RichinPhoenix That’s a relief. Thank you. I reinvest all my RMDs anyway.
The 10 year rule applies for deaths 2020 and after. Because your mom died in 2009, your RMDs fall under the old rules. Thanks for watching
@@CardinalAdvisors Thank you.
And do you have to take inherited Roth Rmds inherited after 2020?
Inherited Roths under the 10 year rule. You can leave it in there until the 10th year
@@CardinalAdvisorsI did hear about the IRS statement in Feb 2022 that RMDs would be required for inherited IRAs but I was confused about rules for ROTH IRAs.
Are you certain there are no RMDs required by a designated beneficiary for an inherited ROTH IRA from a parent that passed after 2020?
Or does it only apply to Traditional and NOT Roth?
Thank you so much for your help.
@@bmp713 The same regulation defined “eligible designated beneficiaries”. 5 Classes of Eligible Designated Beneficiaries
1. Surviving spouses
2. Minor children of the account owner, until age 21 - but not grandchildren 3. Disabled individuals - under the strict IRS rules
4. Chronically ill individuals
5. Individuals not more than 10 years younger than the IRA owner
ROTH IRA has the 10 year rule