RMD for Inherited IRAs
I apologize if this has been asked & answered previously. I inherited both a Roth & Trad non-spouse IRA in 2021. I took the RMD for the Trad acct in 2021 for the year of death since the RMD was not taken before the owner’s death in 2021. RMDs were taken for many yrs prior to 2021.
1. Now, do I understand correctly that no RMD is required for the ROTH each year, but the acct must be empty within 10 yrs?
2. The Trad Inherited acct must have RMDs each yr for yrs 1-9? If yes, do I use the Single Life Expect Table to know the RMD amount or can I just withdraw an amount I choose knowing the entire acct must be empty by the 10th yr?
Thanks!
Permalink Submitted by Alan - IRA critic on Thu, 2022-04-14 16:04
Yes, that’s correct because the Roth does not have a required beginning date. And since the distribution in year 10 will be tax free, it is beneficial to wait until year 10 to take any distributions in order to generate more years of tax free gains.
Also correct, since the owner passed after RBD. Your life expectancy RMDs in years 1-9 are calculated from the single life table based on your age at the end of 2022. Be sure to use the new single life table effective in 2022, and then reduce the 2022 divisor by 1.0 for each year after 2022. You can withdraw any additional amount over the annual RMD you wish, and the RMD you are required to withdraw will likely be lower than the amount you would withdraw if you attempted to withdraw an equal amount each year including year 10. In other words, even after these annual RMDs, you will still likely have a much larger distribution to drain the account in year 10 than you will have in the earlier years.
Above assumes that you inherited directly from the owner and not from someone who was a beneficiary. In other words, you are the designated beneficiary, not a successor beneficiary since successor beneficiary rules are dramatically different.
Permalink Submitted by Patricia Giroux on Thu, 2022-04-14 19:56
Thanks very much for the information. You have been extremely helpful in navigating this Secure Act for regular tax payers!
Permalink Submitted by david anderson on Thu, 2022-04-21 15:44
In the case where a person (above RBD) died in 2015 and left both IRA and Roth to kids and the kids stretched both. now one child, still all kids under 60, has died and left mom’s iras to sibling. Do the two iras need to take the RMDs for the year in which the sister died?
Permalink Submitted by Alan - IRA critic on Thu, 2022-04-21 15:57
Yes, the year of death RMD must be completed by the successor beneficiary. According to the Secure Act proposed Regs, the successor beneficiary starting in the year after sibling’s death will be subject to the 10 year rule, but will also have to continue the RMD schedule of the deceased sibling because parent passed after RBD. This proposed rule will be contested as overly complex, so many be modified. Check back late in year after this proposal is finalized.