Articles & Alerts

Important News for Retirement Plan Beneficiaries

August 1, 2023

To our Clients and Friends:

The Internal Revenue Service recently issued guidance impacting Required Minimum Distributions (RMDs) from various retirement plans, including Individual Retirement Accounts (IRAs).

If you inherited an IRA on or after January 1, 2020:

In most cases, the account balance must be fully distributed to you by December 31st of the tenth year following the year of death (e.g., December 31, 2030 for a 2020 decedent).

There has been ongoing controversy as to whether annual distributions are or are not required during those ten years. Pending the issuance of final regulations that will relieve the uncertainty, the IRS has again waived penalties for any “missed” distributions in 2023, as they did for 2021 and 2022.

Should the final regulations stipulate that annual distributions are in fact required, it remains unclear whether retroactive distributions for the missed years will be required as well.

If you were born in 1951:

This means that you have reached or will reach age 72 in 2023. Effective January 1, 2023, retirement plan beneficiaries (excluding beneficiaries of inherited or Roth IRAs) begin RMDs at age 73 rather than age 72.

The IRS realized that as a result of this change, age 72 beneficiaries may have received “required” distributions in 2023 that were not required after all. Accordingly, anyone born in 1951 who received a retirement account distribution through July 31, 2023, can choose to roll the funds into an IRA by September 30, 2023. This can be done even though the normal 60-day rollover period was exceeded, or if there was another rollover within the preceding twelve months, neither of which is normally permitted.

If one or both of the above situations apply to you, your Anchin Relationship Partner will be happy to review your distribution options in conjunction with any related tax impact.