Q&A of the Week April 24, 2024

Question

Is it true that the IRS waived mandatory withdrawals from certain inherited individual retirement accounts?

Answer

Yes. The Secure Act states that certain people have 10 years to deplete their inherited retirement accounts. They have to take a required minimum distribution (RMD) each year or they will have to pay a penalty fee.

The IRS has delayed the missed RMD penalty fee since 2020 - and recently delayed it again for 2024. However, this relief is only for certain people, who are referred to as "non-eligible designated beneficiaries."

Non-eligible designated beneficiaries are heirs who are not a spouse, minor child, disabled, or chronically ill. Certain trusts are also included.

Please note: Beneficiaries are still required to empty their account within 10 years, but they won't have to pay a penalty fee for missed RMDs.

If you have questions, please talk with a tax professional.