RMD Inherited IRA – Ten Year Rule
I inherited an IRA from my father who passed away in 2020. He was taking minimum distributions. I choose the ten year rule. From what I understand the IRS waived required distributions for 2020-2023 and I did not take any. Is it correct that starting this year (2024) I need to start taking minimum distributions?
Also, from what I understand the account needs to be drained by the end of ten years which I assume to be ten years from 2020 which was the date of death. Is this correct.
Finally, how are the minimum distributions calculated. Do I just look at the table and calculate the 2024 RMD with no catch up for 2020-2023? This will not completely drain the account since there are only seven years left so do I just take the RMD and in year ten what ever is left just take it to zero account?
Permalink Submitted by Alan - IRA critic on Tue, 2024-02-06 00:42
Since we cannot predict whether the IRS will finalize the proposed Secure Act Regs this year or not, we don’t know if a 2024 beneficiary RMD will be required. My guess is if the IRS has not finalized the regs by the end of Sept, they will have to again waive the 2024 beneficiary RMD. Should the 2024 RMD be required, you would just use the 12/31/2023 value and the current single life table factor for your age in 2021, reduce that divisor by 1.0 for each year thereafter (ie reduce it by 3.0 for your 2024 RMD). The earlier RMDs are not required. The longer annual RMDs are waived, if you do not take voluntary distributions you will end up with a large taxable RMD in year 10. You will find that even if RMDs start this year, they will be far less than a pro rated amount of what is left (unless you are quite old) and you will still be left with a large distribution in year 10. If you want to equalize the distributions from here on, you would take out 1/7 this year, 1/6 next year, etc., and these amounts will likely exceed the RMD by a considerable amount However, your pattern of other income in the next 7 years might result in an advantage to adjust your annual distributions over that period.