As I understand it, RMDs are not required to be taken until one retires.
For a taxpayer who qualifies as a Real Estate Professional, spends
well over 750 hours per year on his real estate activities, has no wage
income but only rental income, is this taxpayer "retired"?
Here's what the IRS has to say about that:
"You cannot keep retirement funds in your account indefinitely. You
generally have to start taking withdrawals from your IRA, SIMPLE IRA,
SEP IRA, or retirement plan account when you reach age 70½. However,
changes were made by the Setting Every Community Up for Retirement
Enhancement (SECURE) Act which was part of the Further Consolidated
Appropriations Act, 2020,P.L. 116-94, signed by the President on
December 20, 2019. Due to changes made by the SECURE Act, if your
70th birthday is July 1, 2019 or later, you do not have to take
withdrawals until you reach age 72. Roth IRAs do not require
withdrawals until after the death of the owner."
If it's an inherited IRA, RMD's have to start the year of the
In article <XnsAC178F7268773spamtraplexregiacom@22.214.171.124> you write:
Are you sure? I thought the new rule is it has to be distributed over
10 years, but any schedule during the 10 years is allowed.
Sorry, that was the old rule. You're right. Here's what IRS
Publication 590-B says:
"There are new required minimum distribution rules for designated
beneficiaries upon the death of the IRA owner after December 31, 2019.
All distributions must be made by the end of the 10th year after death,
except for distributions made to certain eligible designated
Thank you. That is actually how I remembered it from long ago, but
somewhere (I can't find it now) I read something that made it sound like
RMDs were not required if you had not yet retired, regardless of your
age. I knew that wasn't how it was in the past, but things change. Not
this, so thanks for letting me know.
In article <XnsAC179F42B5C62spamtraplexregiacom@126.96.36.199>,
Hmn. I have an IRA inherited from someone who died in July 2019, but
the IRA wasn't distributed until this March. If it matters, the
decedent took his 2019 RMD, and was not my spouse.
Looking at Pub 590-B, it looks like the old rule applies, any time
over 5 years, or over my life expectancy from Table I.
To answer the specific question, you need to know what type of retirement plan the taxpayer has. RMDs from IRAs cannot be deferred simply because you are not retired. RMDs from 401(k) accounts may be deferred if you are still employed by the employer who established the plan *if* the plan document allows it. (Not all do)
Ira Smilovitz, EA
One is not required to take an RMD from an "employer" retirement plan (IRA is not an employer plan), for as long as one continues to work for that same employer. This is true if the plan document allows it, on top of the tax rule.
Maria U. Ku, CPA
You are correct that the old rule applies. You didn't state whether the
owner died on or after the RBD or before the RBD. Your answer implies
the owner died before the RBD as the 5 year rule does not exist for
beneficiaries whose IRA owner died on or after the RBD.
In article <rh3tpd$iak$ firstname.lastname@example.org,
He was way past the RBD and had been taking his RMD for a long time.
Staring at Pub 590-B now I see the bit about RBD, so in my case I have
to take RMD based on my life expectancy.
Adding to the confusion, there were two beneficiaries 50/50, but my half
has already been split out into a separate account so I believe we each
have RMDs from our accounts based on our respective ages.
I'll just add - keep in mind, the Inherited RMD calculation is different
from the RMD for one's own account.
For inherited, you find the divisor the first year, but never return to
the table, you simply subtract '1'.
e.g. you are 50, and the divisor is 34.2. Next year, the divisor is
33.2. At 60, it's 24.2, not the 25.2 from the table.
The IRA will be depleted when you are 84. It starts as a minor
difference, but with large sums, it's an important point to consider.