By Andy Ives, CFP®, AIF®
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Hello! I need clarification regarding RMD statements for customers who hold inherited IRAs or inherited Roth IRAs. I have not been able to find a clear answer to the following question:
Is the custodian required to provide an RMD statement to owners of inherited IRAs (or inherited Roth IRAs)?
IRA custodians are required to provide RMD statements to traditional IRA owners who must take lifetime RMDs for the year. However, they are NOT required to provide RMD statements to beneficiaries of either inherited traditional or inherited Roth IRAs. (Considering all the possible permutations for inherited IRA beneficiaries, it would be a struggle for custodians to properly report and monitor what the applicable payout rules would be for inherited accounts.) Be aware that the ultimate responsibility for calculating the proper RMD falls to the taxpayer.
I have an excel spreadsheet that I’ve been using for years to help track client RMDs. In 2020, RMDs were waived, so I just updated my spreadsheet account values and divisor, but I didn’t send RMD’s to clients. Then in 2021, I updated my spreadsheet account values and divisor and sent RMD’s out to clients. This year, however, when I look at what the IRA custodian’s website shows to be my client’s RMD, their website RMD amount doesn’t match up with my spreadsheet. What I am getting at is, am I supposed to keep using the old Uniform Lifetime Table for these clients or some new RMD table? My understanding is that the new RMD tables are for those who turn age 72 and for those who inherited IRA and Roth IRA accounts having to use the 10-year rule going forward. Please help me figure out which RMD table I should be using.
Thank you so much!
The new tables apply to ALL accounts. You can disregard the old tables, and you will need to update your entire spreadsheet. For lifetime RMDs, it is easy. Just use the new Uniform Lifetime Table for 2022 and all future years. For inherited accounts there is a little more legwork. You will have to go back to the first year when RMDs applied. Find the age of the inherited IRA owner in that first year, overlay the NEW Single Life Expectancy Table to determine the factor that first year, then subtract 1 for each year until 2022. This will give you the proper factor for 2022, and you can continue to subtract 1 for each year going forward.
Question: Hello! I need clarification regarding RMD statements for customers who hold inherited IRAs or inherited Roth IRAs. I have not been able to find a clear answer to the following question: Is the custodian required to provide an RMD statement to owners of inherited IRAs (or inherited Roth IRAs)?