Beneficiary IRA

If a child inherits an IRA from a parent and the parent was taking RMD, what are the options for a beneficiary IRA? Can the 5 year rule be used? Can the child take RMD over his lifetime? Or does he have to withdraw based on parent’s life expectancy?



Child’s life expectancy.
See http://www.retirementdictionary.com/qr_benoptions.htm

Thanks for the info Denise. One more question: is there any penalty for taking the withdrawals earlier (and paying the tax due)?

No penalty. Any amount in excess of the RMD can be distributed in any year including a full lump sum.

Of course, the child would lose many years of tax deferral since his RMD is likely a small % of the balance. He should also check if there is any after tax basis in the inherited IRA with whoever handled the parent’s taxes.

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