RMD Distribution Rule for IRA - Traditional / Roths / Roll-Overs / Inherited
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Focus only on the RMD Distributions for IRA - Traditional / Roths / Roll-Overs / Inherited for Spouse, Trust, Trust by Qualified Disclaimer, Charity, Estate, Non-Spousal Individual Beneficiary, etc.
Under consideration Suggested by: Paul M. Paquette • Upvoted: 18 May • Comments: 21
Brian P ONeill Merged
This is going to become a lot more prevalent and there's already a good article on the Kitces site. Seems like it might be low-hanging fruit? Thanks for considering!
TITUS GARRETT Merged
Thank you Jennifer for suggesting this, excellent topic and request. Also, Brian is on point. See below as referenced here. Kitces articles include flowcharts. Please review and build something for this topic if possible.
"Planning Opportunities For Non-Spouse Beneficiaries Of Inherited Retirement Accounts" JUNE 29, 2016 07:01 AM
AUTHOR: MICHAEL KITCES
"Successor Beneficiary RMD Rules After The Death Of The Original Inherited Retirement Account’s Primary Beneficiary" JULY 29, 2020 07:33 AM
AUTHOR: JEFFREY LEVINE
Teresa Werner Merged
Can I withdraw dollars from my Roth IRA that were converted from my after-tax 401(k) without tax or penalty?
Robert Pyne Merged
And more specifically comparing the benefits of a "see through/conduit" trust vs. just a regular beneficiary arrangement for non eligible designated bene's,
i.e. taxes, tax filings, trustee fees, creditor protection, flexibility, ruling from the grave, etc.
"RMD Rules for Trusts Inheriting IRAs" (suggested by Pam Horack on 2021-05-20), including upvotes (3) and comments (0), was merged into this suggestion.
Language from other similar suggestion that was merged into this one: This info pulled from a recent Wealth Management article:
The post-death RMDs for a trust named as an IRA beneficiary will be calculated under either the stretch payout rule, the 10-year rule, or the five-year rule, depending on certain attributes of the trust and the trust beneficiaries. It matters whether the trust qualifies as a see-through trust, whether it is a conduit trust or an accumulation trust, and whether the trust beneficiaries are nonindividuals, “regular” beneficiaries or part of the new class of “eligible designated beneficiaries.”
"Inherited Roth IRA Distribution Rules" (suggested by David on 2021-07-12), including upvotes (5) and comments (0), was merged into this suggestion.
Language from "Inherited Roth IRA Distribution Rules" suggestion that was merged into this one: "Similar to the existing flowchart for the RMDs from a Traditional IRA, but showing a beneficiary options depending on DOD (i.e. whether it was before the SECURE Act), beneficiary type, before or after RMD age, and whether or not the Roth 5-year rule had been met by the account owner etc."
"Secure Act RMD Rules" (suggested by Aaron on 2019-12-19), including upvotes (7) and comments (0), was merged into this suggestion.
Language from "Secure Act RMD Rules" suggestion that was merged into this one: "A chart showing the different RMD rules based on date of death and description of various beneficiaries."
"Beneficiary IRA Distribution Rules (and Successor Beneficiary) pre and post Secure Act" (suggested by JENIFER ARONSON on 2021-09-29), including upvotes (4) and comments (1), was merged into this suggestion.
"Aggregation of accounts for purposes of RMD" (suggested by Skip Briggs on 2022-03-17), including upvotes (1) and comments (0), was merged into this suggestion. Original language from this merged suggestion: "Chart displaying what types of accounts can be aggregated for purposes of calcing RMDs
All Trad IRS Seps & Simples, ( total amount can be taken from any account)
403b ( same as above )
Qualified plans must be separate calcs and distribution for each plan etc."
"When a Trust is the beneficiary of an IRA" (suggested by David Morrison on 2021-12-12), including upvotes (1) and comments (0), was merged into this suggestion.
"fixing Roth or Regular IRA excess/ineligible contribution" (suggested by Sean Cook on 2018-11-09), including upvotes (2) and comments (0), was merged into this suggestion. Original language from this merged suggestion: "Had a client where you found out their income was too high for the contributions they made? What if it was not just current year? What do they have to withdraw, can they recharacterize it, are there any penalties, IRS form to file, etc. A flowchart to help coordinate fixing it would be good for client service."
"Is my ira subject (exempt) to (from) the IRA One Rollover per Year Rule?" (suggested by J.C. Corrigan on 2021-05-21), including upvotes (1) and comments (0), was merged into this suggestion. Original language from this merged suggestion: "The definition of "trustee-to-trustee" feels rather implicit. If a client wants to transfer a beneficiary IRA at Fidelity to a beneficiary IRA at Schwab, is this subject to the One Rollover per Year or Tstee to Tstee? There are several other examples like this situation."
"rule of 55" (suggested by Shawn Glogowski on 2021-01-27), including upvotes (3) and comments (0), was merged into this suggestion. Original language from this merged suggestion: "I see an IRA distribution flow chart. A flow chart showing when you can take money from a 401k penalty free would be helpful. For example, using the rule of 55 when someone retires at age 55 and can access their retirement funds without penalty."
"What do I do with after-tax IRA or 401k contributions?" (suggested by Pam Horack on 2020-01-23), including upvotes (3) and comments (0), was merged into this suggestion. Original language from this merged suggestion: "How to determine removal of after tax 401k monies, which are not subject to the pro-rata rule, and after tax IRA monies which are subject to the pro-rata rule. Include how Roth conversions may or may not affect this process."
"Should a surviving spouse create an inherited IRA" (suggested by Mike Keeler on 2021-09-02), including upvotes (2) and comments (0), was merged into this suggestion. Original language from this merged suggestion: "I know it is pretty simple, if the surviving spouse <59.5, so inherited IRA. But it would be nice to have something that explains the 10% penalty if you take money out of an IRA that has been rolled over."
Guidance on distribution options for inherited Traditional & Roth IRAs would be highly useful to my team and clients, especially options for non-spouse distribution requirements. As the baby boomer generation starts to age, our industry will be seeing an influx of these accounts over the years ahead. Thanks for your consideration!
Perhaps I'm mistaken, but I believe if the owner of an IRA died after the RBD, then a non-eligible beneficiary would have to take an RMD calculated using the Single Life Expectancy Table for years 1-9, making sure the account was empty by 12/31 of year 10. If I'm correct, then your flow chart, "Can I Delay Distributions From The Traditional IRA I Inherited?", needs to be updated.
If you could build in the logic to a workflow that included the client's DOB and the decedent's DOD, that would make the tool very powerful and less about when the person reached age 70.5 or 73.
When were they born...
What type of accounts do they have... (Inherited = we need DOD and relationship etc...)
What issues do we need to consider...RMD on *this* schedule, Roth Conversion, QCD (or not - no QCD on inherited IRAs) broken down by account would be amazing!
If you were so inclined, you could also include the balance of the account at the prior year and an estimate of RMD amounts or a progression i.e., in 2023, RMD = 0; based on the same account value, the RMD in 2024 would be X, and the RMD in 2025 would be Y.