RMDs and Inherited IRAs: Today’s Slott Report Mailbag

Thursday, October 06, 2022

By Andy Ives, CFP®, AIF®
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

I must take an RMD this year, based on 12/31/2021 account values. My current account values are much less than those of 12/31/2021. This is typical, I’m sure. Is there any chance Congress will recognize this hardship and grant some relief similar to that granted several years ago when the virus pandemic began?

Answer:

Many account owners subject to RMDs (required minimum distributions) have seen their retirement balances decline this year. As such, their RMDs are elevated vs. current values. However, it is highly doubtful Congress will take any action to reduce or waive RMDs. The previous waiver was predicated on a world-wide pandemic that killed millions. What we are experiencing now is normal market ebbs and flows. Volatility is part of investing. Bulls and bears. Booms and recessions. Our suggestion is to bite the bullet, take the RMD, don’t expect a bailout from Congress, and possibly consider reallocating your account to minimize future volatility.

Question:

I inherited three traditional IRAs from my mother, who died in 2020. I withdrew all the money in one IRA at the end of 2020. I took a partial withdrawal in 2021 and withdrew the remaining money from the second IRA in 2022. Am I required to take a RMD from the third IRA in 2022 even though the amount I took from the second IRA in 2022 far exceeded the amount I would have been required to take from the third IRA in 2022? In other words, may an individual aggregate RMD amounts for all inherited IRAs, and withdraw the total from one IRA?

Thank you.

Diane

Answer:

Diane,

Yes, inherited IRAs from the same decedent can be aggregated for RMD purposes. Since all three of your inherited IRAs came from your mother, you can calculate the RMD on each and subsequently withdraw the total from any combination of the inherited IRAs. Inherited IRAs from different decedents cannot be aggregated.

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