Estate Planning

RMD Penalty Waived for 2021 and 2022 Missed RMDs within 10-Year Rule

By Chris Duderstadt

October 27, 2022

RMD Penalty Waived for 2021 and 2022 Missed RMDs within 10-Year Rule

Key Points – RMD Penalty Waived for 2021 and 2022 Missed RMDs within 10-Year Rule

  • Some Good News from the IRS?!?
  • What Does the 50% RMD Penalty Waiver Entail?
  • Reviewing Some Main Takeaways of the SECURE Act
  • RMDs Are a Key Component of Forward-Looking Tax Planning
  • 3 Minutes to Read

Planning for Your RMDs Just Got a Little Bit Better

We’re always thankful for everyone who tunes into to listen to Dean Barber and various other financial subject matter experts on The Guided Retirement Show. On October 11, we released an episode with Dean and Will Doty that focused on planning for your RMDs. We had planned the topic of the episode well before the 11th, but our timing was rather fitting. Why? Because four days earlier, the IRS made a big announcement concerning the 50% missed RMD penalty.

On October 7, the IRS issued Notice 2022-53. That notice waived the 50% penalty on missed RMDs from 2021 and 2022 on IRAs that fall within the 10-year payout rule. The earliest that the 50% RMD penalty will be imposed for missed distributions within the 10-year window is 2023.

“The notice appears (though vague) to waive the RMD for 2021 and 2022 on a beneficiary IRA subject to the SECURE Act. There would have been no RMDs for 2020 under SECURE Act because the only RMD in year of the death is from the original taxpayer,” Modern Wealth Management Director of Tax Corey Hulstein said. “Therefore, the RMDs would begin based on the single-life expectancy table of the beneficiary. This is considered a treasury regulation, so it isn’t subject to legislative approval.”

One thing to note is that this notice isn’t considered to be a treasury regulation. Therefore, it isn’t subject to legislative approval. The IRS is simply clarifying the rules in the SECURE Act.

A Refresher on the SECURE Act

Nearly six months ago, America’s IRA expert, Ed Slott, joined Dean on The Guided Retirement Show, and he had a lot to say about the SECURE Act. While the SECURE Act did postpone the required beginning date to start taking RMDs from 70 ½ to April 1 of the year after you turn 72, it also severely restricted Stretch IRAs.

Before the SECURE Act, IRA beneficiaries could disperse distributions based on their life expectancy. The SECURE Act requires most non-spouse beneficiaries to empty their accounts within 10 years of the original account owner’s passing. That’s where that RMD penalty comes in, as missed distributions are typically taxed at 50%.

A Couple More Notes on the RMD Penalty Waiver

Of course, Ed and his team were on top of this news about the 50% RMD penalty being waived for missed 2021 and 2022 RMDs within the 10-year rule. They made a good point that the IRS’s notice won’t impact inherited IRAs by eligible designated beneficiaries, RMDs for beneficiaries who inherited them prior to 2020, and lifetime RMDs.

The news about the RMD penalty waiver is something that Corey and our tax team has been bringing up during year-end tax planning meetings with clients. Many people are passionate about legacy planning and want their loved ones to be in good hands after they die. This RMD penalty waiver only adds to the importance of proactive tax planning and doing things like Roth conversions.

Calculating RMDs with Our Financial Planning Tool

Remember, the purpose of tax planning is to pay as little in taxes over your lifetime, not just one year. If you have questions about this RMD penalty waiver and how it can impact you, we encourage you to check out our financial planning tool. Our tool does many things that most retirement calculators don’t, including factoring in RMDs. Just click the “Start Planning” below to get started from the comfort of your own home.


It goes without saying that the rules surrounding RMDs are quite confusing. The complexity of things like the SECURE Act makes it that much more important to work with financial professionals. Our team of CERTIFIED FINANCIAL PLANNER™ professionals is ready to answer your questions at no cost or obligation. You can schedule a 20-minute “ask anything” session or complimentary consultation by clicking here. We welcome the opportunity to help bring clarity and confidence to your financial life.

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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.