Inherited IRA – Estate
Last year I set up three Inherited IRAs as estate beneficiaries. The decedent passed away without any living heirs. We were able to get the estate bypass making these Inherited IRAs in the beneficiaries’ names and under their social security numbers. However, I was told these still need to follow the rules of Inherited IRAs with the estate as beneficiaries. The decedent passed away in 2020 at the age of 88. He would have been 88 on 12/31/2020. The factor for 88 years for Inherited IRAs is 6.6. Since two years have passed, I believe it should be 4.6 for 2022.
– My questions do the beneficiaries have to take RMDs every year until the entire accounts are distributed or does it all have to be emptied by 2025?
– Is 4.6 the correct factor?
I know Inherited IRAs by individuals have 10 years to take out the money and don’t have mandated RMDs every year, but I think Inherited IRAs for estates are different.
Permalink Submitted by Alan - IRA critic on Tue, 2022-09-06 19:06
It is correct that the RMDs do not change as a result of assignment of the IRA out of the estate. The RMD divisor for 2021 under the former tables is 5.3. For 2022 and beyond the divisors must be reset to the new 2022 RMD tables and 4.6 is the correct divisor for 2022, but it was 5.3 for 2021. The RMDs must be taken annually, but the inherited IRAs would be drained in 2026 when the divisor drops to .6. There is no year of death RMD to be concerned with here since all 2020 RMDs were waived by the CARES Act.