How Does 2021 and 2022 RMD Relief Impact 2023 RMDs for Beneficiaries of Inherited Retirement Accounts

The IRS did not directly announce that inherited IRA RMDs are waived for 2021 and 2022. However, because no penalty will apply and the IRS has offered no corrective procedures for taking those missed RMDs, most experts assume that no RMDs will actually be required in 2021 and 2022. While we don’t know exactly how the IRS will handle the situation, it seems that all other generally applicable rules remain the same. That means that the inherited account owner’s ten-year distribution period will not change due to the missed RMDs. If an account owner died during 2020, the account must still be emptied by December 31, 2030. It also seems that 2023 RMDs will be calculated in the same way that they would have been calculated absent the penalty waiver. In other words, they’ll be calculated as though the 2021 and 2022 RMDs had been taken. Typically, RMDs are calculated using the account balance as of December 31 of the prior year and the taxpayer’s applicable life expectancy factor (determined using IRS life expectancy tables and the inherited account owner’s age). For more information on the new distribution rules, visit Tax Facts Online. : Q 3902. Note: Q is updated.