Inherited IRA 5-year rule
I inherited an IRA from my 85-year old mother earlier this year. She took her RMD this year before death. When I inherit, is the 5-year distribution an option? In other words, can I take no RMD for the first 4 years (2020-2023) then withdraw the entire RMD at year 5? Or am I forced to take an RMD each year because my mother was past RMD age at her death? Thanks in advance.
Permalink Submitted by Alan - IRA critic on Fri, 2019-12-20 16:56
The 5 year rule only applies when the owner passes prior to the RBD, therefore you must use the life expectancy method. Nothing prevents you from draining the account in the 5th year, or any year for that matter. You should take 4 years of life expectancy RMDs and could then take a lump sum distribution in the 5th year. Very roughly, that would be around 20% distributed prior to 2024 and 80% in 2024.