IRA Beneficiary Payout Options: The New Rules and When They Take Effect
As if paying out to an IRA Beneficiary was not confusing enough, the IRS substantially changed the payout options for most beneficiaries by passing the SECURE Act effective 2020. While the regulations made it clear that most non-spouse beneficiaries had to have their Inherited IRAs closed by December 31 of the tenth year after the owner died, it was left unclear whether or not beneficiaries of owners who had reached their RMD status had to take a distribution in the first nine years or were they optional?
After issuing the Proposed Regulations in February 2022 indicating some beneficiaries would have to take a distribution the first nine years, the IRS failed to finalize the Proposed Regulations until July 2024. During that time, the IRS waived the “late penalty” for beneficiaries who did not take an RMD death distribution in years 2021-2024.
Effective 2025, some beneficiaries will have to begin taking death distributions or they will be subject to an IRS penalty of up to 25%. This informational two-hour webinar will answer the who, when, and how questions of calculating RMDs to beneficiaries for 2025. A Sample Letter to beneficiaries to inform them of the rule change and their RMD requirements will be included.
