Like a lot of people, I have beneficiaries designated for my
traditional IRA. A friend who has done the same says her financial
adviser told her that the rules have changed, and now
(a) anyone who inherits an IRA must pay income tax on the whole
amount in that tax year but
(b) the money will escape taxation entirely if she designates a 501c3
charity as beneficiary.
It appears that Stan Brown <the_sta...@fastmail.fm> said:
Like a lot of people, I have beneficiaries designated for myI think someone is deeply confused about RMDs and QCDs. Here is the
traditional IRA. A friend who has done the same says her financial
adviser told her that the rules have changed, and now
(a) anyone who inherits an IRA must pay income tax on the whole
amount in that tax year but
(b) the money will escape taxation entirely if she designates a 501c3 >charity as beneficiary.
IRS web page on inherited IRA distributions which says it was updated
in December:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
If you have an inherited IRA, you usually have to take a RMD every
year no matter your age. In 2020 the rules changed making the schedule different, and added some options for spouses to delay RMDs.
You can tell the trustee to send money directly to a charity, known as
a Qualified Charitable Distribution, and the QCD counts as a RMD.
Details here:
https://www.irs.gov/publications/p590b#en_US_2021_publink100090626
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
--
It appears that Stan Brown <the_sta...@fastmail.fm> said:
Like a lot of people, I have beneficiaries designated for my
traditional IRA. A friend who has done the same says her financial >adviser told her that the rules have changed, and now
(a) anyone who inherits an IRA must pay income tax on the whole
amount in that tax year but
(b) the money will escape taxation entirely if she designates a 501c3 >charity as beneficiary.
On Tuesday, February 7, 2023 at 5:15:31 PM UTC-5, John Levine wrote:
I think someone is deeply confused about RMDs and QCDs. Here is the
IRS web page on inherited IRA distributions which says it was updated
in December:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
If you have an inherited IRA, you usually have to take a RMD every
year no matter your age. In 2020 the rules changed making the schedule different, and added some options for spouses to delay RMDs.
You can tell the trustee to send money directly to a charity, known as
a Qualified Charitable Distribution, and the QCD counts as a RMD.
Details here: https://www.irs.gov/publications/p590b#en_US_2021_publink100090626
This reply is nearly as flawed as the premise posted by the
original poster. There is generally no requirement to take RMDs.
RMDs are an option available to certain beneficiaries. If the
beneficiary elects to take distributions over the allowable
lifelime, then there are rules for calculating the RMD.
Individual Beneficiaries can be spouses, eligible designated
non-spouses, and designated non-spouses that are not eligible
designated beneficiaries. Each type of beneficiary has its own
rules regarding distributions. The options available to each
category of beneficiary are explained in the first reference of
John Levine's response:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
Look at the rules for Death of the Account Holder occured in 2020
or later for the current rules.
On Tuesday, February 7, 2023 at 5:15:31 PM UTC-5, John Levine wrote:lifelime, then there are rules for calculating the RMD.
It appears that Stan Brown <the_sta...@fastmail.fm> said:
Like a lot of people, I have beneficiaries designated for myI think someone is deeply confused about RMDs and QCDs. Here is the
traditional IRA. A friend who has done the same says her financial >adviser told her that the rules have changed, and now
(a) anyone who inherits an IRA must pay income tax on the whole
amount in that tax year but
(b) the money will escape taxation entirely if she designates a 501c3 >charity as beneficiary.
IRS web page on inherited IRA distributions which says it was updated
in December:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
If you have an inherited IRA, you usually have to take a RMD every
year no matter your age. In 2020 the rules changed making the schedule different, and added some options for spouses to delay RMDs.
You can tell the trustee to send money directly to a charity, known as
a Qualified Charitable Distribution, and the QCD counts as a RMD.
Details here:
https://www.irs.gov/publications/p590b#en_US_2021_publink100090626
--This reply is nearly as flawed as the premise posted by the original poster. There is generally no requirement to take RMDs. RMDs are an option available to certain beneficiaries. If the beneficiary elects to take distributions over the allowable
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly --
Individual Beneficiaries can be spouses, eligible designated non-spouses, and designated non-spouses that are not eligible designated beneficiaries. Each type of beneficiary has its own rules regarding distributions. The options available to eachcategory of beneficiary are explained in the first reference of John Levine's response:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
Look at the rules for Death of the Account Holder occured in 2020 or later for the current rules.
Ira Smilovitz, EA
Leonia, NJ
On Tuesday, February 7, 2023 at 2:45:41 PM UTC-8, ira smilovitz wrote:lifelime, then there are rules for calculating the RMD.
On Tuesday, February 7, 2023 at 5:15:31 PM UTC-5, John Levine wrote:
It appears that Stan Brown <the_sta...@fastmail.fm> said:
Like a lot of people, I have beneficiaries designated for my >traditional IRA. A friend who has done the same says her financial >adviser told her that the rules have changed, and nowI think someone is deeply confused about RMDs and QCDs. Here is the
(a) anyone who inherits an IRA must pay income tax on the whole
amount in that tax year but
(b) the money will escape taxation entirely if she designates a 501c3 >charity as beneficiary.
IRS web page on inherited IRA distributions which says it was updated
in December:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
If you have an inherited IRA, you usually have to take a RMD every
year no matter your age. In 2020 the rules changed making the schedule different, and added some options for spouses to delay RMDs.
You can tell the trustee to send money directly to a charity, known as
a Qualified Charitable Distribution, and the QCD counts as a RMD.
Details here:
https://www.irs.gov/publications/p590b#en_US_2021_publink100090626
--This reply is nearly as flawed as the premise posted by the original poster. There is generally no requirement to take RMDs. RMDs are an option available to certain beneficiaries. If the beneficiary elects to take distributions over the allowable
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly --
category of beneficiary are explained in the first reference of John Levine's response:Individual Beneficiaries can be spouses, eligible designated non-spouses, and designated non-spouses that are not eligible designated beneficiaries. Each type of beneficiary has its own rules regarding distributions. The options available to each
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
Look at the rules for Death of the Account Holder occured in 2020 or later for the current rules.
Ira Smilovitz, EAIra S: I think you answered an unasked question. RMDs are not an option for beneficiaries (forgetting for a moment a surviving spouse who has not reached the RBD). Your own weblink even says that.
Leonia, NJ
"Beneficiaries of retirement plan and IRA accounts after the death of the account owner are subject to required minimum distribution (RMD) rules." The weblink explains how the RMD is calculated for the beneficiaries.
--
On Tuesday, February 7, 2023 at 8:46:02 PM UTC-5, Alan wrote:
On Tuesday, February 7, 2023 at 2:45:41 PM UTC-8, ira smilovitz
wrote:
On Tuesday, February 7, 2023 at 5:15:31 PM UTC-5, John LevineIra S: I think you answered an unasked question. RMDs are not an
wrote:
It appears that Stan Brown <the_sta...@fastmail.fm> said:This reply is nearly as flawed as the premise posted by the
Like a lot of people, I have beneficiaries designated for myI think someone is deeply confused about RMDs and QCDs. Here
traditional IRA. A friend who has done the same says her
financial adviser told her that the rules have changed, and
now (a) anyone who inherits an IRA must pay income tax on
the whole amount in that tax year but
(b) the money will escape taxation entirely if she
designates a 501c3 charity as beneficiary.
is the IRS web page on inherited IRA distributions which says
it was updated in December:
https://www.irs.gov/retirement-plans/plan-participant-employee
/retirement-topics-beneficiary
If you have an inherited IRA, you usually have to take a RMD
every year no matter your age. In 2020 the rules changed
making the schedule different, and added some options for
spouses to delay RMDs.
You can tell the trustee to send money directly to a charity,
known as a Qualified Charitable Distribution, and the QCD
counts as a RMD.
Details here:
https://www.irs.gov/publications/p590b#en_US_2021_publink10009
0626
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The
Internet for Dummies", Please consider the environment before
reading this e-mail. https://jl.ly --
original poster. There is generally no requirement to take
RMDs. RMDs are an option available to certain beneficiaries. If
the beneficiary elects to take distributions over the allowable
lifelime, then there are rules for calculating the RMD.
Individual Beneficiaries can be spouses, eligible designated
non-spouses, and designated non-spouses that are not eligible
designated beneficiaries. Each type of beneficiary has its own
rules regarding distributions. The options available to each
category of beneficiary are explained in the first reference of
John Levine's response:
https://www.irs.gov/retirement-plans/plan-participant-employee/r
etirement-topics-beneficiary
Look at the rules for Death of the Account Holder occured in
2020 or later for the current rules.
Ira Smilovitz, EA
Leonia, NJ
option for beneficiaries (forgetting for a moment a surviving
spouse who has not reached the RBD). Your own weblink even says
that. "Beneficiaries of retirement plan and IRA accounts after
the death of the account owner are subject to required minimum
distribution (RMD) rules." The weblink explains how the RMD is
calculated for the beneficiaries. --
The opening sentence is poorly written and contradicted by the
explict rules that follow. The 10-year rule is not an RMD. The
only requirement is that the entire account be emptied within 10
years. Even without the 10-year rule, any beneficiary can withdraw
more than the RMD in any year without penalty (other than the tax
liability associated with the distribution).
Given both of those options, and the fact that a non-spouse that
is not an eligible designated beneficiary can only use the 10-year
rule, I can only conclude that RMDs *are* an option. You don't
have to take them, and in some cases you can't take them. In fact,
the only case where an RMD is required is for a spousal
beneficiary where the decedent's death occurred after the required
beginning date and the beneficiary chooses not to roll the IRA
into their own IRA account.
As a side note, IRS webpages (and publications, for that matter)
are not authoritative sources.
ira smilovitz <ira.sm...@gmail.com> wrote:
On Tuesday, February 7, 2023 at 8:46:02 PM UTC-5, Alan wrote:
On Tuesday, February 7, 2023 at 2:45:41 PM UTC-8, ira smilovitz
wrote:
On Tuesday, February 7, 2023 at 5:15:31 PM UTC-5, John LevineIra S: I think you answered an unasked question. RMDs are not an
wrote:
It appears that Stan Brown <the_sta...@fastmail.fm> said:This reply is nearly as flawed as the premise posted by the
Like a lot of people, I have beneficiaries designated for myI think someone is deeply confused about RMDs and QCDs. Here
traditional IRA. A friend who has done the same says her
financial adviser told her that the rules have changed, and
now (a) anyone who inherits an IRA must pay income tax on
the whole amount in that tax year but
(b) the money will escape taxation entirely if she
designates a 501c3 charity as beneficiary.
is the IRS web page on inherited IRA distributions which says
it was updated in December:
https://www.irs.gov/retirement-plans/plan-participant-employee
/retirement-topics-beneficiary
If you have an inherited IRA, you usually have to take a RMD
every year no matter your age. In 2020 the rules changed
making the schedule different, and added some options for
spouses to delay RMDs.
You can tell the trustee to send money directly to a charity,
known as a Qualified Charitable Distribution, and the QCD
counts as a RMD.
Details here:
https://www.irs.gov/publications/p590b#en_US_2021_publink10009
0626
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The
Internet for Dummies", Please consider the environment before
reading this e-mail. https://jl.ly --
original poster. There is generally no requirement to take
RMDs. RMDs are an option available to certain beneficiaries. If
the beneficiary elects to take distributions over the allowable
lifelime, then there are rules for calculating the RMD.
Individual Beneficiaries can be spouses, eligible designated
non-spouses, and designated non-spouses that are not eligible
designated beneficiaries. Each type of beneficiary has its own
rules regarding distributions. The options available to each
category of beneficiary are explained in the first reference of
John Levine's response:
https://www.irs.gov/retirement-plans/plan-participant-employee/r
etirement-topics-beneficiary
Look at the rules for Death of the Account Holder occured in
2020 or later for the current rules.
Ira Smilovitz, EA
Leonia, NJ
option for beneficiaries (forgetting for a moment a surviving
spouse who has not reached the RBD). Your own weblink even says
that. "Beneficiaries of retirement plan and IRA accounts after
the death of the account owner are subject to required minimum
distribution (RMD) rules." The weblink explains how the RMD is
calculated for the beneficiaries. --
The opening sentence is poorly written and contradicted by the
explict rules that follow. The 10-year rule is not an RMD. The
only requirement is that the entire account be emptied within 10
years. Even without the 10-year rule, any beneficiary can withdraw
more than the RMD in any year without penalty (other than the tax
liability associated with the distribution).
Given both of those options, and the fact that a non-spouse thatI agree. RMDs had been the rule, but no longer for inherited IRAs,
is not an eligible designated beneficiary can only use the 10-year
rule, I can only conclude that RMDs *are* an option. You don't
have to take them, and in some cases you can't take them. In fact,
the only case where an RMD is required is for a spousal
beneficiary where the decedent's death occurred after the required beginning date and the beneficiary chooses not to roll the IRA
into their own IRA account.
As a side note, IRS webpages (and publications, for that matter)--
are not authoritative sources.
Stu
http://DownToEarthLawyer.com
--I would argue that RMDs were never the *rule*, except when the decedent's death occurred after the required starting date. For deaths prior to 2020, there was a 5-year rule.
This email has been checked for viruses by AVG antivirus software. www.avg.com
--
I think where the confusion comes from is that those who think RMDs are required are starting from the position that
all beneficiaries want to stretch the distributions as long as possible. To do that, you must take RMDs. But that
starting assumption isn't valid.
According to ira smilovitz <ira.sm...@gmail.com>:
I think where the confusion comes from is that those who think RMDs are required are starting from the position thatI think we're nitpicking about what we call a RMD. With the ten year
all beneficiaries want to stretch the distributions as long as possible. To do that, you must take RMDs. But that
starting assumption isn't valid.
rule, which I think we agree is the most likely one for a non-spouse
heir, the minimum is the whole thing but you have a decade to take it.
No matter what kind of IRA you have, sooner or later you have to start
taking money out of it, but the rules definitely can be complicated.
If you have a halfway decent IRA custodian, they will do the calculations
for you. Mine are at Vanguard and there's a page on my web site which
tells me how much I have to take out of each IRA this year, and lets
me schedule the withdrawals if I want.
R's,
John
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
--
On Tuesday, February 7, 2023 at 8:46:02 PM UTC-5, Alan wrote:lifelime, then there are rules for calculating the RMD.
On Tuesday, February 7, 2023 at 2:45:41 PM UTC-8, ira smilovitz wrote:
On Tuesday, February 7, 2023 at 5:15:31 PM UTC-5, John Levine wrote:
It appears that Stan Brown <the_sta...@fastmail.fm> said:
Like a lot of people, I have beneficiaries designated for my >traditional IRA. A friend who has done the same says her financial >adviser told her that the rules have changed, and nowI think someone is deeply confused about RMDs and QCDs. Here is the
(a) anyone who inherits an IRA must pay income tax on the whole >amount in that tax year but
(b) the money will escape taxation entirely if she designates a 501c3 >charity as beneficiary.
IRS web page on inherited IRA distributions which says it was updated in December:
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
If you have an inherited IRA, you usually have to take a RMD every
year no matter your age. In 2020 the rules changed making the schedule different, and added some options for spouses to delay RMDs.
You can tell the trustee to send money directly to a charity, known as a Qualified Charitable Distribution, and the QCD counts as a RMD.
Details here:
https://www.irs.gov/publications/p590b#en_US_2021_publink100090626
--This reply is nearly as flawed as the premise posted by the original poster. There is generally no requirement to take RMDs. RMDs are an option available to certain beneficiaries. If the beneficiary elects to take distributions over the allowable
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
--
category of beneficiary are explained in the first reference of John Levine's response:Individual Beneficiaries can be spouses, eligible designated non-spouses, and designated non-spouses that are not eligible designated beneficiaries. Each type of beneficiary has its own rules regarding distributions. The options available to each
withdraw more than the RMD in any year without penalty (other than the tax liability associated with the distribution).https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
Look at the rules for Death of the Account Holder occured in 2020 or later for the current rules.
The opening sentence is poorly written and contradicted by the explict rules that follow. The 10-year rule is not an RMD. The only requirement is that the entire account be emptied within 10 years. Even without the 10-year rule, any beneficiary canIra Smilovitz, EAIra S: I think you answered an unasked question. RMDs are not an option for beneficiaries (forgetting for a moment a surviving spouse who has not reached the RBD). Your own weblink even says that.
Leonia, NJ
"Beneficiaries of retirement plan and IRA accounts after the death of the account owner are subject to required minimum distribution (RMD) rules." The weblink explains how the RMD is calculated for the beneficiaries.
--
Given both of those options, and the fact that a non-spouse that is not an eligible designated beneficiary can only use the 10-year rule, I can only conclude that RMDs *are* an option. You don't have to take them, and in some cases you can't take them.In fact, the only case where an RMD is required is for a spousal beneficiary where the decedent's death occurred after the required beginning date and the beneficiary chooses not to roll the IRA into their own IRA account.
As a side note, IRS webpages (and publications, for that matter) are not authoritative sources.I got it but didn't you overlook the eligible designated beneficiary (e.g., a minor child) who inherits after the owner had reached the RBD. I thought an RMD was still required using the longer of the two life expectancies (owner or beneficiary). I didn'
Ira Smilovitz, EA
Leonia, NJ
--
I got it but didn't you overlook the eligible designated beneficiary (e.g., a minor child) who inherits after the
owner had reached the RBD. I thought an RMD was still required using the longer of the two life expectancies (owner
or beneficiary). I didn't think the 10 year election was available in this instance.
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