IRS Intends to Fix Post-SECURE Act Inherited IRA RMD Examples in Publication 590-B, May 13, 2021

The IRS' recently revised Publication 590-B contained a surprise for inherited IRA beneficiaries now subject to the SECURE Act's 10-year rule. Under the 10-year rule, inherited IRA balances must be depleted within the first 10 years after the original account owner's death unless the beneficiary is an eligible designated beneficiary. Most expected the SECURE Act "10-year rule" would be interpreted the same as the old "five-year rule", meaning RMDs would not be required each year during the 10-year period. In one revised illustration, however, Pub. 590-B indicated that the beneficiary would be required to take a distribution each year during the 10-year period. IRS officials have since announced that the illustrations were incorrect—and a revised Publication 590-B will make it clear that inherited IRA beneficiaries have 10 years to deplete the account funds whatever way they choose. For more information on the 10-year rule, see Q 3691.