RMD rules for inherited IRA
Child inherited parent’s IRA.
– Mom had the IRA and died (she died 10 years ago). Dad kept the IRA in moms name. Mom would now be 69 years old this year. Dad passed away this year (2023). Child inherited mom’s Bene IRA account due to passing of father. Child is 47.
How does the RMD occur for the child now?
Permalink Submitted by Alan - IRA critic on Tue, 2023-08-29 20:30
Since Mom passed prior to her RBD and because Dad passed prior to the end of the year in which he would have had to start beneficiary RMDs (2027), Dad is treated as the owner and the child as a designated beneficiary instead of a successor beneficiary for purposes of determining child’s RMD. Therefore, the child will be subject to the 10 year rule, but will not have to take annual beneficiary RMDs in years 1-9 and there is no year of death RMD for Dad to be concerned with. The inherited IRA must be drained in 2033, but to level out the taxable income, child might want to take partial distributions in years 1-9 even though not required, to avoid spiking their tax rate by the lump sum distribution in 2033.