Inherited IRA RMD the year the owner turned 72
We have a client who passed away March 24, 2022. Today (12/21/22) would have been her 72nd birthday. Her daughter is the sole beneficiary. We are confused as to the rules the daughter will have to follow: 10-year distribution or stretch. The client died before turning 72, but in the year she would have turned 72. Which rule will she need to follow once she starts taking out distributions? Her accountant is saying she doesn’t need to take a RMD this year, but is not saying which rule for RMDs will need to be followed. Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2022-12-21 18:29
SInce client passed prior to her RBD (4/1/2023), the accountant is correct that there will be no year of death RMD requirement. Unless she is disabled, daughter will be subject to the 10 year rule but there will be no annual RMDs in years 1-9 because mother passed prior to RBD. The inherited IRA need only be drained by 12/31/2032, but daughter may still want to take some optional distributions in years 1-9 to avoid a large taxable event in 2032.