Final IRS Regulations Issued On Inherited IRAs, RMDs

Reference: See here

The IRS last week issued final regulations on the Setting Every Community Up for Retirement Enhancement Act, enacted in late 2019. The final regs generally follow the proposed regulations issued in 2022.

Despite receiving many requests for change, the IRS kept the most controversial rule from the proposed regulations, its interpretation of the new 10-year rule on inherited IRAs and other retirement accounts .

The Stretch IRA was replaced by the 10-year rule. For IRAs inherited after 2019, most beneficiaries must fully distribute the IRA within 10 years after it is inherited.

The first group is IRAs whose original owners hadn't yet reached the beginning age for taking RMDs.

A beneficiary of such an IRA can distribute it under any schedule, provided it is fully distributed by the end of the 10 years. The beneficiary can distribute some each year, wait until the end of 10 years to distribute it all, distribute the entire IRA soon after inheriting, or in any other pattern.