In July 2024, the IRS finalized regulations (TD 10001) clarifying a major point of confusion. If the decedent died after reaching their required beginning date (RBD) for required minimum distributions (RMDs), the beneficiary cannot wait until year ten to liquidate the account. Under the “at-least-as-rapidly” rule, the beneficiary must take annual RMDs based on their own life expectancy in years one through nine, and then fully deplete the account in year ten. If the decedent died before their RBD, no annual distributions are required in years one through nine, though the ten-year depletion deadline remains.
SECURE 2.0 raised the RBD age to 73 for individuals born between 1951 and 1959, and to 75 for those born in 1960 or later. While the IRS provided transitional relief waiving penalties for missed inherited IRA RMDs from 2021 through 2024, these penalties are fully active. Under IRC §4974, failing to take a required distribution triggers a 25% excise tax on the undistributed amount, which can be reduced to 10% if corrected within the statutory correction window.