Page 18 Like us on Facebook advocate newspaper Facebook.com/ Advocate.news.ma INHERITED IRA REQUIRED MINIMUM DISTRIBUTIONS T he IRS recently finalized its regulations on inherited IRA Required Minimum Distributions (RMDs) in July of this year. This area of the tax law has become more and more complicated. The Secure Act involved major tax legislation relating to RMDs when dealing with beneficiaries other than spouses, minor children, beneficiaries less than 10 years younger than the decedent IRA owner and disabled or chronically ill beneficiaries, who are referred to as eligible beneficiaries. The other group of beneficiaries is referred to as ineligible designated beneficiaries (i.e. the non-spouse, et al beneficiaries). An example would be your child. Under the old rule, a child could stretch out the RMDs over his or her life expectancy. This would allow for great tax efficiency as the distributions could be stretched out over 20, 30 or even 40 years. Under the Secure Act, your child is required to deplete the IRA account within 10 years following the year of your death. This is a massive change in tax law. The new regulations now make it clear that if you reached your Required Beginning Date (RBD) at the time of your death, meaning you had already reached the age where you are required to begin taking your RMDs, your child would not only be required to deplete the account by the end of the 10th year following your death, your child would also have to begin taking annual distributions from this IRA account in years 1 through 9, with RMD calculations based upon his or her own life expectancy. This was unclear in the IRS’ previously proposed regulations. In the event you had not reached your RBD and were not required to begin taking your RMDs, your child would not have to take any distributions during years 1 through 9. However, the entire IRA account would have to be completely depleted by the end of the 10th year following the year of your death. It should be noted, that depending on one’s tax position, it may very well be beneficial to actually withdraw funds from the IRA account ratably over that 10 year period to reduce Uncle Sam’s tax bite allowing you to remain in a lower federal tax bracket. The IRS has waived RMDs with respect to inherited IRA’s for calendar years 2021, 2022, 2023 and 2024. However, the RMDs must commence in calendar year 2025. If you inherited an IRA from someone who died in 2020, the account would still have to be depleted by the end of 2030, notwithstanding the fact that RMDs are not required to be taken until 2025. This rule would not apply to surviving spouses and other eligible beneficiaries. These rules are complicated to say the least. There are different rules applying to estates and conduit Trusts that have been named beneficiaries of IRA accounts. Joseph D. Cataldo is an estate planning/elder law attorney, Certified Public Accountant, Certified Financial Planner, AICPA Personal Financial Specialist and holds a master’s degree in taxation. THE MALDEN ADVOCATE–Friday, September 13, 2024 VOTE | FROM PAGE 17 tect Tips. “When mayors walk into a restaurant in their community, servers and bartenders are letting them know directly that there is overwhelming opposition among the staff, management and owners of neighborhood restaurants across the state. The reason is simple… this will lower tipped employee take home pay, skyrocket costs to restaurants and dramatically increase prices to patrons resulting in fewer jobs and closured businesses.” Endorsing Mayors include: (Alphabetical by last name) Melinda Barrett – Haverhill Gary Christensen – Malden Christian Dumais – Marlborough Robert Hedlund – Weymouth Patrick Keefe – Revere Nicole LaChapelle – Easthampton Michael Nicholson – Gardner Neil Perry – Methuen Joe Petty - Worcester Sean Reardon – Newburyport Charlie Sisitsky - Framingham Robert Sullivan – Brockton “The restaurant industry is a cornerstone of our local economy, providing jobs and generating tax revenue. This ballot question would disrupt the system that currently works for servers, bartenders, and business owners who have said time and time again that they want to keep it the way it is. Vote No on 5 for the future of Haverhill and communities across the Commonwealth.” – Melinda Barrett, Haverhill “This out-of-state ballot initiative is an approach that does not work for Massachusetts. Our tipping system has proven to be successful, and the majority of tipped employees prefer it. To ensure our local businesses can continue to prosper, vote NO in November.” – Gary Christensen, Malden “Question 5 will force restaurants to raise prices and our servers and waitstaff will earn less. We need to help our tipped employees and restaurants, not make things harder, while making it even more expensive for everyone else.” – Robert Hedlund, Weymouth “The advocates of this ballot initiative fail to consider the real-world impacts on tipped workers and the businesses that employ them. If passed, Question 5 will hurt the very people it claims to help.” – Patrick Keefe, Revere “The Commonwealth was built on small, local businesses. The passing of this ballot question will create irreversible economic damages within each and every community in Massachusetts.” – Neil Perry, Methuen "I'm supporting the overwhelming majority of servers and bartenders who oppose Question 5 because it will reduce their wages while forcing many restaurants to raise prices. Higher prices and lower wages while we are still struggling with inflation is not what we need in Massachusetts." – Joe Petty, Worcester “Nobody knows the Massachusetts tipping system better than the bartenders, servers, and owners themselves. I worked in restaurants for over 30 years, and it was an occupation that kept my family in our home and food on our table. This could cripple restaurants in the Commonwealth, and particularly my City of Newburyport. To prevent excess, unnecessary financial burdens, it is of utmost importance to vote NO this November.” – Sean Reardon, Newburyport For more information about the campaign, please visit www. protecttips.org.
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