Understanding the Latest IRS Ruling on Inherited IRAs: A Comprehensive Guide


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The IRS has released a new ruling—memorandum 54—that affects inherited IRAs and their beneficiaries. We aim to break down the complexities surrounding this issue, particularly focusing on how it applies to specific categories of beneficiaries.

The SECURE Act: A Brief Overview

Passed a few years ago, the SECURE Act changed the landscape for inherited IRAs. Its main objective was to accelerate the distribution of these assets, affecting both those who will inherit an IRA and those planning to leave one to their heirs.

Who are the Beneficiaries Affected by the New IRS Ruling?

The new ruling primarily affects a subset of beneficiaries known as “Designated Beneficiaries” under the SECURE Act.

Three Categories of Beneficiaries Under the SECURE Act

Eligible Designated Beneficiaries
These are people like the surviving spouse, minor children of the owner, and disabled or chronically ill individuals who can stretch out the distribution over their lifetime.

Designated Beneficiaries
These are mainly adult children, grandchildren, and others who do not fall under the ‘Eligible’ category. They generally must empty the IRA within 10 years.

Non-Designated Beneficiaries
This includes entities like trusts, charities, and estates. These beneficiaries generally must distribute the IRA within 5 years.

The New IRS Ruling: A Closer Look

The 10-Year Rule
This rule applies to “Designated Beneficiaries,” requiring them to empty the IRA within a 10-year period.

RMD Waivers for 2023
The new IRS ruling waives the required minimum distribution (RMD) for 2023 for a narrow group within the “Designated Beneficiaries” category.

Planning Tips for IRA Owners and Beneficiaries

Understand Which Category You Fall Into:
Knowing your category can help you plan better.

Don’t Just Defer:
Although the new IRS ruling allows for RMD waivers for 2023, deferring may create a “tax bomb” in the future.

Consult a Financial Advisor:
Sound financial planning can help you minimize the tax burden for yourself and your beneficiaries.


Understanding the nuances of the new IRS ruling on inherited IRAs can be complex, but it’s crucial for both IRA owners and beneficiaries. The SECURE Act and the latest IRS guidelines have made it imperative to revisit your estate planning strategies to adapt to these changes. By staying informed and planning wisely, you can navigate the complexities of inherited IRAs more effectively.

Inherited IRA – IRS Change to 10 Year Rule

Today, we break down the latest IRS memorandum (#54) on inherited IRAs and its implications on beneficiaries. With changes brought in by the Secure Act a few years ago, it’s essential to understand how these updates affect your retirement planning. We’ll help you understand which category of beneficiary you fall under, what this new ruling means, and how it could affect your future financial plans.

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