2022-43: IRS provides relief from proposed RMD distribution rules


The IRS has announced that the proposed regulations requiring annual RMDs to designated beneficiaries of an inherited IRA over a 10-year period, which appear likely to be adopted, will not apply until the 2023 distribution year at the earliest. (IRS Notice 2022-53) This notice does not officially adopt the proposed regulations, but was issued to assuage concerns regarding potentially missed RMDs that were voiced in comments to the proposed regulations.

The IRS’s proposed regulations took many taxpayers and tax professionals by surprise because they assumed that the pre-SECURE Act rules that governed the five-year distribution period, extended to 10 years by the SECURE Act, would apply. This would have allowed taxpayers with inherited IRAs to wait until year 10 to take any distributions from those accounts.

The proposed regulations, as originally released, applied to accounts inherited after December 31, 2019, which meant that many beneficiaries who inherited IRAs in 2020 were required to take distributions for 2021, but failed to do so. This would have resulted in many taxpayers being subject to the IRC §4974 50% excise tax for failing to take a required distribution. As a result of the delayed effective date, taxpayers are not subject to this excise tax for failing to take the annual RMDs in 2021 or 2022 and may apply for a refund if the excise tax was already paid.

IRS Notice 2022-53 is available at:

www.irs.gov/pub/irs-drop/n-22-53.pdf


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