Beneficiary IRA RMDs and taxation

Submitted by David Jazo on Thu, 2023-12-14 18:27

Grandfather who was 85 passed away in 2022 and was taking his RMDs. He left his son who was 55 as sole beneficiary and son placed the assets in a Inherited IRA. Unfortuntely he passed away 3 months after his father and left his 2 minor children (17 and 15) as the beneficiaries of the Inherited IRA. Do the minors have to take RMDs or can they wait until age 21? Also, if they decided to take RMDs now, will those RMDs be taxed at the childs rate or will they take on the remaining parent’s income tax rate? Thank you!



Submitted by Alan - IRA critic on Thu, 2023-12-14 19:00

  • The minors will be subject to the 10 year rule and will have to take annual RMDs using father’s age in years 1-9. The minors are not EDBs as they are not only successor beneficiaries, but they are not the children of the IRA owner, therefore their age is immaterial. Their RMDs will be subject to the kiddie tax rules as well. 
  • That said, the IRS has waived the beneficiary RMD for 2023 for the son due to failure to finalize the Secure Act proposed Reg. Therefore, there is no beneficiary RMD due for 2023 by son or the children, but the beneficiary RMDs will likely be due for 2024 and beyond with the inherited IRAs having to be drained by the end of 2032.
  • If grandfather’s 2022 RMD was not completed by GF or son, the minor’s are responsible for completing that RMD as well, and the deadline for that was 4/18/2023. 

Submitted by David Jazo on Thu, 2023-12-14 21:21

Thank you for the info!

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