inherited IRA by children in 2022

Submitted by Eddie Ngo on Fri, 2022-08-05 22:34

Has the IRS determined if one has to take out of a inherited IRA over 10 years, or as long as the entire amount is depleted by the 10th. year. If it has to be taken out within the 10 years, how is the calculation made each year to determine what needs to be taken out from the IRA each year?



Submitted by Alan - IRA critic on Sat, 2022-08-06 00:28

  • The Secure Act Regs are still in the proposal stage, therefore it is not known whether the beneficiary must take annual RMDs in years 1-9 yet. But if IRA owner passed prior to RBD, annual RMDs are not required of a 10 year rule beneficiary.
  • Minor children of the deceased owner are EDBs, and not subject to the 10 year rule until they reach 21. Until 21, they must take annual RMDs based on their single life expectancy.
  • If not minor children of the deceased owner, if annual RMDs are required within the 10 year rule, they are calculated using the single LE of the beneficiary.

Submitted by Kevin Holzgruber on Mon, 2022-08-08 10:15

I have inherited an IRA and have read in other articles that i will be liable for taxes on this inheritance. If my father funded this IRA with after tax dollars shouldn’t only the appreciation be taxable? If so, would you have any idea how to get the cost basis on that account. Thank you

Submitted by David Mertz on Mon, 2022-08-08 11:12

  • Yes, your father’s basis in nondeductible traditional IRA contributions is nontaxable and is distributed proportionately in distributions paid to you as beneficiary.
  • Your father’s basis would be shown on your father’s most recently filed Form 8606, usually line 14.  That’s what you need to find.  If your father had been taking RMDs for at least a couple of years, the most recently filed Form 8606 would be part of his final individual tax return.
  • In calculating the taxable portion of distributions paid to you you would prepare a Form 8606 for the inherited IRA separate from your own Form 8606 (if any).

Submitted by Alan - IRA critic on Mon, 2022-08-08 11:35

  • In addition, if father passed this year before taking any distributions, you can use line 14 of his 2021 8606 for your inherited IRA basis. You (jointly with any other beneficiaries) will then be responsible for completing his 2022 RMD from your inherited IRA if he passed after his required beginning date. 
  • However, if he took any distributions in 2022 before passing, you will have to wait until his final 1040 and 8606 are filed using the DOD value of his IRA to determine the line 14 basis on his 2022 8606, which is the amount of basis you and any other beneficiaries inherited.

Submitted by Kevin Holzgruber on Wed, 2022-08-10 18:49

Thank you very much for your response. This was very helpful.

Add new comment

Log in or register to post comments