The Dreidel – May 2024 Edition

Dear fellow practitioners, CPAs, attorneys, and other professionals. Welcome to the seventh edition of our “Dreidel” newsletter about planning and investment issues of US citizens living overseas.

This month Mike Reed focuses on Required Minimum Distributions.

Before the first Cares Act was passed in 2020 the rules for RMDs (Required Minimum Distributions) on inherited IRAs were straightforward, but that has changed. Below is a summary of the new rules for RMDs on Inherited IRAs.

  • If you inherited an IRA before Jan 1 2020, then there are no changes for you.  You have the option to take the RMDs based on your age and stretch the withdrawals over your lifetime.  The account does not have to be drained within 10 years, and if you were a spouse inheriting an IRA, you could make it your own, and you would not have to start RMDs until you reached 70 ½ yourself.
  • With the passing of the Cares Act, the rules have changed for RMDs on inherited IRAs.  If you are a spouse who inherits an IRA, you can still claim it as your own, and take RMDs based on your life expectancy.
  • Things get complicated when a non-spouse inherits an IRA from someone who passed after January 1, 2020.  Now the IRA must be emptied within 10 years, and depending on the status of the person who passed, there are different ways to fulfill those 10 years.  If the person who passed had not begun their RMD, then the inheritor does have some flexibility about how they empty the IRA over the next 10 years. They can do some every year, all at the beginning, or all at the end.  However, if the person who passed had begun their RMD, then the inheritor will have to do at least some withdrawals in years 1-9 and make sure the IRA is empty by year 10. They have much less flexibility. 
  • The 10 year rule applies to Roth IRAs as well. Although since the original owner did not have RMDs, then the inheritor does get some flexibility with how they distribute the Roth IRA.

 The RMD age has changed as well.  In the past, your first RMD was due by April 1st in the year after you were 70 ½, but now that has been changed to April 1st of 2025 for  people reaching the new RMD age of 73  in 2024.

And one final gift from the IRS: they are once again waiving the penalty for not taking your RMD in 2024 for an IRA that was inherited in 2023.  This does not mean the RMD is waived. If you forget to take the RMD and you amend the error, you won’t have to pay the penalty.

We are happy to discuss this in further detail, if you do have non-US clients who live outside the US with US brokerage assets. Please contact us to discuss.


Nardis Advisors LLC (“Nardis”) is a Registered Investment Advisory Firm regulated by the U.S Securities and Exchange Commission in accordance and compliance with applicable securities laws and regulations. Registration does not imply a certain level of skill or training. Nardis does not render or offer to render personalized investment advice through this medium. The information provided herein is for informational purposes only and does not constitute financial, investment or legal advice. Investment advice can only be rendered after delivery of the Firm’s disclosure statement (Form ADV Part 2) and execution of an investment advisory agreement between the client and Nardis.

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