You Make the Call - Sept. 28, 2023

Question: Linda inherited an IRA from her brother, Mark, who died at the age of 78. Mark was taking his required minimum distributions (RMDs). Linda is 67 and is still working. She is considered a noneligible designated beneficiary. When must Linda complete her distributions from the inherited IRA account?

Answer: Current rules stipulate that Linda must complete her inherited IRA distribution within 10 years of Mark's death. However, proposed regulations issued in February 2022 suggest that RMDs must be taken annually, rather than simply before the end of the tenth year. The proposed regulations are intended to incorporate the legislative changes included in the SECURE 2.0 Act of 2022. The proposed regulations, once finalized, were originally set to be effective for 2022 and later calendar years. However, in IRS Notice 2023-54, the agency announced that final regulations on RMDs would apply no earlier than 2024. Proposed regulations are not law until finalized, but some advisors suggest that taxpayers who have inherited IRAs should begin taking the distributions annually.