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When my mother passed she left an IRA account that got split up among the kids. I just read an article with the sentence: "If you leave retirement money to your kids or anyone other than your spouse, they’re typically required to empty the accounts by the end of the 10th year following the year of your death."

Is this correct? It is the first time I have ever come across this requirement in the (almost!) 10 years since her death.

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    The rules changed in 2019, but are not retrospective. If you inherited before 2019 you continue to take RMDs based on the age calculations as in the past.
    – Jon Custer
    Commented Apr 3, 2023 at 13:09
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    Thank-you @JonCuster. If you make this a separate response/answer, I'll mark it as such.
    – AA040371
    Commented Apr 3, 2023 at 13:12

1 Answer 1

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The SECURE act in 2019 changed the rules on inherited IRAs (if you are not the spouse). See, for example, AARP's blurb. Before there was a set of rules to calculate Required Minimum Distributions based on an 'age' that combined your age and that of the original owner. The new rules are that you have to empty the IRA within 10 years, with some clarifications last year that you needed to be pulling money out each year rather than waiting 10 years and taking it out in one go.

One look at these new rules (which do not apply to your situation but were asked about in comments) can be found at a University of Illinois site. Apparently, IRS publication 590-B, "Distributions from Individual Retirement Arrangements (IRAs)" for 2020 and 2021 had no details on required withdrawls, but only stated that the amount be withdrawn within 10 years. As of August 2022, the IRS has changed the rules for 2023 and forward. Quoting from the link:

Beneficiaries of IRAs inherited in 2020, 2021, or 2022 should plan on receiving distributions from that IRA or qualified plan in 2023. That distribution should be at least as large as the RMD that would be indicated given their life expectancy and the age they attain on their 2023 birthday.

Put differently, they want you to be taxed each year at least as much under the new rules as you would have been under the old rules, and pull it all out within 10 years on top of that.

The good news is, for you, since you inherited pre-2019 the old rules apply. The SECURE act was not retroactive so you can ignore those clarifications and continue to use the adjusted age for your required minimum distributions.

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    Can you provide any more information about the comment "some clarifications last year that you needed to be pulling money out each year rather than waiting 10 years and taking it out in one go"
    – stannius
    Commented Apr 4, 2023 at 22:45
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    I found some articles from Feb 2022 that say that if the decedent had already started RMDs, the inheritor had to continue taking RMDs.
    – stannius
    Commented Apr 5, 2023 at 0:17
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    @stannius - the 2022 Pub 590-B is up at irs.gov/publications/p590b#en_US_2022_publink100090421 and covers many different scenarios. It would seem that the 2023 version will differ, so some caution is advised. However, yes, if the original owner had started taking RMDs, and the inheritor is an eligible designated beneficiary (such as a minor child), there are RMDs. For a mere designated beneficiary (adult children for example), the 10 year rule applies. Very complicated (hey, it is the IRS).
    – Jon Custer
    Commented Apr 5, 2023 at 12:57
  • Thanks, but honestly I'm not sure answering my side question improved your answer to the OP. I took a stab at editing your answer but ended up with four copies/versions of the phrase "which don't apply to you" so I abandoned it.
    – stannius
    Commented Apr 5, 2023 at 13:58

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