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© SEI 2022 For Intermediary Use Only. Do Not Distribute. 14 B. Does an Inherited IRA or Inherited Roth beneficiary need to take a Required Minimum Distribution (RMD) for 2023? For Inherited IRA's and Inherited Roth IRA's, the 5498 will not indicate if the beneficiary is required to take an RMD. However, the beneficiary may be required to take on depending on when the original owner died and what category of beneficiary they are considered. SPTC will provide this RMD calculation for all eligible Inherited Traditional and Inherited Roth IRA's. You can find the RMD and annual RMD tracking on www.SEIAdvsiorCenter.com under the 'Business' tab 'RMDs'. For Spousal Beneficiaries who open an Inherited IRA, they must start taking an RMD in the year the original owner would have reached their Required Beginning Date. Spousal beneficiaries also have the option to transfer the inherited IRA into their own IRA. The SECURE Act of 2019 changed Inherited IRA election rules for non-spouse 'designated beneficiaries'. These changes apply to any IRA's where the original IRA owner died on or after January 1 2020. For those non-spouse beneficiaries, generally they must deplete the Inherited IRA within 10 years, except if they fall into an allowable exception outlined in the SECURE Act. Additionally if an original IRA beneficiary inherited an IRA, but died on or after January 1, 2020, the 'successor' beneficiary will need to deplete the account with 10 years. In addition, if the original owner died after their 'Required Beginning Date', the beneficiary must take RMD's in years 1-9. If the beneficiary is a minor child of the deceased, they can delay their 10 year start date until the year they turn 21. If the original IRA owner died on or after January 1 2020, but a Designated Beneficiary is less than 10 years younger (or is older) than the deceased, is Chronically Ill, or is Disabled, the beneficiary will still have the option to do Single Life Expectancy RMD payments. If the original IRA owner died on or before December 31 2019, the beneficiary would have the pre-SECURE Act inherited elections and are likely subject to an annual RMD, unless the original owner died on or before their RBD and the beneficiary specifically elected the option of depleting the account in 5 years (The '5 Year Rule'). For Non-Designated Beneficiaries, 'non-person' beneficiaries with no life expectancy, their elections are also unchanged with the SECURE Act and they are generally subject to an annual RMD, unless the original owner died before their RBD. In that case, the beneficiary must deplete the account within 5 years C. How is a Removal of Excess Contribution or a Re-Characterized contribution reported? Per IRS guidance, SPTC will not issue an amended 5498 form if the client does a Removal of Excess Contribution or Re-Characterizes a contribution. The original contribution still needs to be reported as is, in addition to the corrective actions taken by the IRA owner. In the case of a Removal of Excess contribution, the 5498 will still report the original contribution. Then the client will be issued a 1099R showing the removal of excess. Therefore, if the removal was done in 2022 for 2021 the client will not receive this 1099R tax form until January 2023. In the case of a Re-Characterized contribution, the 5498 will still report the original contribution to the Roth or Traditional IRA. Then the client will be issued a 1099R showing the Re-Characterized contribution coming out of the Roth or Traditional IRA. And then the client will be issued a 5498 showing the Re- Characterized contribution being posted to the receiving Traditional or Roth IRA. If the Re-characterization was done in 2022 for 2021 the client will not receive the 1099R or second 5498 tax form until January 2023. D. How are '72t distributions' (Substantially Equal Periodic Payments) reported? If a Traditional, SEP, SIMPLE, or Roth IRA owner started a series of Substantially Equal Periodic Payments (SEPP), often called a 72t distribution, they must continue the SEPP for 5 years or until they turn 59 1/2; whichever is longer. The IRA owner cannot add funds to the IRA or take additional disbursements until the SEPP has concluded. It is up to the IRA owner to track SEPP end dates and to avoid violating the terms. For Traditional, SEP, and SIMPLE IRA's the 1099R will report the distribution with a code 2, 'Early distribution, exception applies', if the IRA owner is under 59 ½ or with a code 7, 'Normal Distribution', if the owner is over 59 ½. For Roth IRA's the 1099R will report the distribution with a code J, 'Early distribution from a Roth IRA', if the IRA owner is under 59 ½ or with a code T, 'Roth Distribution, Exception applies', if the owner is over 59 ½.

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