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Inherited IRA Update

By
Matt Meline

, CFP®

Founder and CEO

Wednesday, October 12, 2022

If you have an inherited IRA and/or beneficiary IRA account, you should be aware of some recent confusion regarding the distribution rules in these accounts.

 

The10-year rule that was established in 2019 dictated that all beneficiaries have to liquidate the IRA over a ten-year period. Initially it inferred that distributions could be taken at any time including all at the end of the 10 years. The confusion set it for those beneficiaries that received the IRA from an owner who was ALREADY taking required minimum distributions.  These used to occur at age 70 ½ and were amended to age 72 recently.

 

Well, for now (2021 and 2022) the IRS has concluded that distributions ARE NOTREQUIRED even if the original beneficiary was taking required minimum distributions. (IRA Notice 2022-53).  

 

“So, we don’t have to worry about it for last year, we don’t have to worry about it for this year.  Now what that notice doesn’t say, however, is what happens going forward.” – Jeffrey Levine, Horsesmouth

 

There you have it – this issue will remain an important planning topic for these accounts.  How this cash flow item will impact your planning around taxes and retirement will need to be revisited annually at a minimum.  PrairieFire clients will have this included as part of their regular planning reviews.

Want to learn more about how PrairieFire can help? Our community enjoys free resources to help get their financial house in order.
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