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New RMD Laws for IRA Beneficiaries

With all the new laws set out by the IRS, inheriting an individual retirement account (IRA) from your spouse or parent might be more confusing than ever.

Since 2020, the IRS has changed how beneficiaries can receive their benefits. Here’s a breakdown of how this will affect RMDs going forth.

Inherited an IRA and don't know what to do? Here are the new laws and requirements for RMD  2023

Before the IRS changed IRAs and their required minimum distribution (RMDs), people who inherited an IRA could get their benefits in small amounts throughout their lifespan.

This can still be done only if you fall under the exception category. This category is based on the following factors:

● if you are the deceased owner's spouse

● a minor child (until you reach 21)

● chronically ill/disabled

● not more than 10 years younger than the owner

If you meet any of the above-mentioned factors, you can still withdraw IRA benefits from a deceased spouse from the IRA throughout your lifespan.

If you aren’t married to the owner and do not meet the exception rules, you are expected to empty the account. If the owner died in 2020 or later, you must take the full distribution of the IRA within 10 years of the original date of death.

The spouse has more options when inheriting an IRA. You can put the account in your name to become your IRA, and you can contribute to it. You can decide to open an inherited IRA account and move the funds into that one, or you can choose to receive a lump-sum distribution.

Inherited IRAs and New RMDs Laws

Having an inherited IRA means that you are required to withdraw the minimum amount that beneficiaries have to withdraw in a given year.

A 25% penalty is charged to beneficiaries who do not withdraw these RMDs. For those who make an effort, the penalty is reduced to 10%. However, the IRS has waived penalties for people who have missed withdrawing their RMDs in 2023 if they had inherited the account in 2022.

There is a required beginning date (RBD) that will alert the owner/beneficiary when they must take the RDMs. Starting from 2023, If you were born before 1960, the age is 73, and if you were born after 1960, it is age 75. The IRS ruled that the RBD date will increase to 75 in 2024.

For the non-spouse beneficiaries, if the IRA owner has passed on before they turned the age of the RBD, then you won’t need to take the yearly distributions provided that you empty the account by the 10th year after the owner has died.


However, there has been no guidance on the requirements for 2024 yet. Now that you understand how the new laws affect the RMDs of IRAs and how they will affect your finances moving forward, you can be prepared for any changes the IRS suggests in the upcoming year. To better navigate the landscape of changes, check-in with your Financial Advisor.


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