The IRS has issued new guidance regarding Inherited IRA RMDs, essentially waiving penalties for those who failed to take an RMD in 2021 and 2022. What else was in IRS Notice 2022-52?…(read more)

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The Internal Revenue Service (IRS) recently announced a major change in the way inherited Individual Retirement Accounts (IRAs) are taxed. The new ruling provides relief for those who have inherited an IRA from a deceased loved one.

Under the new ruling, beneficiaries of inherited IRAs are no longer required to take the Required Minimum Distribution (RMD) from the account. This means that beneficiaries can keep the money in the account and let it grow, tax-deferred, until they are ready to withdraw it.

The new ruling applies to all inherited IRAs, including Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, and inherited 401(k)s. It also applies to all beneficiaries, including spouses, children, grandchildren, and non-spouse beneficiaries.

The new ruling is a welcome relief for many beneficiaries of inherited IRAs. Before the ruling, beneficiaries were required to take out a certain amount of money each year, even if they were not ready to spend it or use it for retirement. This could lead to a large tax bill if the beneficiary was not prepared for it.

The new ruling also provides more flexibility for beneficiaries of inherited IRAs. Beneficiaries can now decide when to take out the money, allowing them to plan for the tax implications and use the money when it is most beneficial for them.

The new ruling is a major change for those who have inherited an IRA and will provide much-needed relief for many beneficiaries. It is important to note, however, that the ruling does not apply to inherited 401(k)s or other employer-sponsored plans. Beneficiaries of these plans must still take the RMDs as required by their plan.

For those who have inherited an IRA, the new ruling is a welcome change and will provide much-needed relief. It is important to understand the new ruling and how it affects your particular situation. Consult a financial advisor or tax professional to ensure you are making the best decisions for your financial future.