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Relief for Inherited IRA Missed RMDs: A couple of our advisors were looking into the IRS changes to Inherited IRAs and wanted to ensure you were current. In December 2019, the SECURE Act provided that most non-spouse beneficiaries of IRAs (or plan participants) who died in 2020 or later would no longer stretch RMDs over their lifetime. These “non-eligible designated beneficiaries” (NEDBs) became subject to a 10-year payment rule. In February of 2022, the proposed SECURE Act regulations, the IRS surprised everyone by saying that, in addition to the 10-year payout, annual RMDs are required in years 1-9 of the 10-year period for NEDBs if the account owner died on or after beginning RMD.

This IRS position meant that NEDBs of account owners who died in 2020 after their RMDs beginning date beneficiaries should have taken their first required distribution in 2021 (year 1 of the 10-year period) – even though nobody thought that was necessary until February 2022 (when the proposed regs came out).

The IRS realized this was unfair. In October 2022, the IRS issued Notice 2022-53, which said it would excuse RMDs for anyone in this group of NEDBs who missed 2021 RMDs. For good measure, the IRS also relieved RMDs for missed 2022 RMDs for this group. And it relieved 2022 RMDs for NEDBs who inherited in 2021 from an account owner who died after the RMD beginning date.

In July of 2023, Notice 2023-54 extended that relief even further. The new Notice added another year of relief by waiving 2023 RMDs for NEDBs of IRA owners who died in 2020 or 2021 after the RMD’s beginning date. It also excused 2023 RMDs for NEDBs of owners who died in 2022 after the RMD beginning date.

If you’re an NEBD and inherited an IRA (or plan participant) in 2020 from an IRA owner who died after the RMD beginning date, your first three years of annual RMDs (2021, 2022, and 2023) are now waived. If you’re a NEBD and inherited in 2021 from an owner who died after the RMD beginning date, your first two years of RMDs (2022 and 2023) are waived. Finally, if you’re a NEDB who inherited in 2022 from such an IRA owner, your first year of RMDs (2023) is forgiven.

If you inherited an IRA after 2020 and need clarification here, simply call us.

Appointing an Executor: Along the same lines of thinking through inherited IRAs is appointing an executor. Talking about and planning for times when we may be unable to make the best decisions for ourselves isn’t much fun … but it is necessary. Having an executor gives you a say in what happens to your estate. Without clear instructions, processing an estate can be overwhelming for the executor. You also want to ensure you’re choosing someone you trust. As you think about who to choose—which can be changed at any time—here are seven items the chosen executor needs to complete:

  1. Obtain a death certificate—find the will, hire a lawyer (if needed), and obtain a copy of the death certificate to settle the estate. Leaving a will divides your finances and possessions among those listed. Updating beneficiaries on accounts is an easy process. If you need to update yours, please let us know.
  2. Notify the probate court—Probate is the distribution of your assets after you pass away. Your executor will need to petition the probate court in the area where you lived.
  3. Inform interested parties—reporting your passing to Social Security, banks, and other financial institutions is a crucial step.
  4. Pay all debts on taxes—pay debts, file income taxes, and inheritance or estate taxes if applicable.
  5. Inventory assets and distribution plan—this is money but also includes properties or other investments.
  6. Distribute assets to beneficiaries—once bills and taxes are paid, your executor will divide assets among your beneficiaries.
  7. Complete the required forms—paperwork! A lot of paperwork! The executor must close accounts and check that the court has everything it needs to complete your estate settlement.

This list can seem somewhat overwhelming, and it is most people’s desire not to be a burden to others. Estate planning now is one of the best ways to make that burden lighter. You can include clear and specific instructions, ensuring you have a legal will, beneficiaries, and a named executor.

Business Briefing—

  • Cooling Core Inflation: The consumer price index rose just 0.2% in July, the same increase as in June, the Labor Department reported last week. The annual inflation rate was 3.2%, up from a 3% pace in June. Core inflation, which excludes volatile food and energy prices, fell to an annual rate of 4.7% from 4.8% in June. The cooling price pressures raised expectations the Federal Reserve will hold off on raising interest rates again at its September meeting. (The Wall Street Journal)
  • China Exports Fall: On Wednesday, Beijing reported that its exports to the rest of the world plunged in July at their fastest pace since February 2020 as Western manufacturers reduced their reliance on Chinese suppliers. The decline threatened to slow China’s recovery from the coronavirus crisis despite government efforts to stimulate the world’s second-largest economy. China’s National Bureau of Statistics also reported that consumer prices fell 0.3% and producer prices fell 4.4% in July compared to a year earlier. (The Wall Street Journal, The New York Times)
  • Zoom Back to the Office: The post-pandemic return to the office has reached a milestone. The video communications company Zoom tells employees it wants those who live near an office to work in person at least twice a week. Zoom, which became a household name during the pandemic as companies used its video-conferencing service to let employees work from home or while traveling, said the mandate would apply to anyone residing within 50 miles of an office. (The Washington Post)

Personal Finance Tip: A recent survey of 2,497 U.S. adults found that 51% ended up with unwanted charges from a subscription or membership. A separate study by Chase Bank found that number much higher—closer to 71% of Americans waste over $50/month on unwanted subscription fees. It’s easy to forget about unwanted trials that turn into costs, but studies show the older the customer, the less likely they are to incur unwanted charges. The most likely subscriptions to rack up charges are places like Costco or a gym (31%), audio streaming services (23%), newspapers and other media (12%), gaming (12%), and food delivery plans (10%)—our Monday morning advice: look at those credit card bills and determine which subscriptions you can cancel. There is an easy way to do this within Apple settings, which can be found here.