Non-spouse Beneficiary Inherited IRA Rules: 10-Year Rule, RMD requirement, Exceptions, Tax Strategy

In July 2024, the IRS released its long-awaited final regulations clarifying the annual RMD (required minimum distribution) rules for non-spouse beneficiaries of retirement accounts that are subject to the new 10-year rule. But like most IRS regulations, it’s anything but simple and straightforward. The short answer is for non-spouse beneficiaries that are subject to the 10-year rule; some beneficiaries will be required to begin taking annual RMDs starting in 2025 while others will not. In this article, we will review:

1) The RMD requirement for non-spouse beneficiaries
2) RMD start date
3) IRS penalty relief for missed RMDs
4) Are one-time distributions required for missed RMDs 2020 - 2024?
5) Different RMD rules for Traditional IRAs versus Roth IRAs
6) Different RMD rules for Roth 401(k) versus Roth IRAs
7) Common RMD mistake for stretch rule beneficiaries

In addition to covering the topics above related to the new RMD rules, we want this article to be a “one-stop shop” for non-spouse beneficiaries to understand how these non-spouse inherited IRAs work from start to finish, so we will start this article by covering:

1) How Inherited IRA work for non-spouse beneficiaries
2) Rules for a decedent that pass either before or after 2019
3) The new 10-year Rule
4) Beneficiaries that are granted an exception to the new 10-year rule
5) Required minimum distributions (RMDs)
6) Taxation of distributions from inherited IRAs
7) Tax strategies and Pitfalls associated with Inherited IRA accounts
8) Special rules for minor children with Inherited IRAs

Contact Michael Ruger with Questions: 518-477-6686 or [email protected]
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