Using dist from inherited to satisfy RMD
Client(72) has a few IRA’s. They just inherited another IRA from parent. Can they take funds from the inherited to satisfy RMD for their IRA’s?
The accounts are all pre-SECURE Act so working with old stretch rules. I knew that you could not take from and IRA to cover and inherited IRA RMD. Just wasn’t sure if you took more from the inherited, if that “extra” distribution could count towards RMD of their trad IRAs
No, it cannot. Additional distributions in excess of the RMD will reduce the balance and therefore reduce future beneficiary RMDs. Additional distributions from either the owned IRA or the inherited IRA cannot be used to reduce the RMDs from the other type.
Got it, thought as much but needed to confirm. Also found the “RMD Planning – The Aggregation Rules” piece Ed did back in 2015. Great peice that should be updated 😉
Permalink Submitted by David Mertz on Fri, 2022-02-11 21:02
No. Distributions from the inherited IRA only satisfy an RMD for the inherited IRA. Given that the parent died after 2019, the 10-year rule applies unless the client is an eligible designated beneficiary because they are disabled. Under the 10-year rule there are no annual RMDs, the inherited IRA just needs to be drained by the end of the 10th year following the year of the death of the parent. (If the parent died before 2022 and the inherited IRA was established by rollover from a governmental plan, the 10-year rule does not apply. Instead, the client must take RMDs based on the Single Life Expectancy table.)