RMDs for Inherited IRAs

Submitted by Taynia Vakapuna on Wed, 2022-11-09 20:17

Are RMDs for non spousal inherited IRAs picked up on the decedent’s final tax return or does the non-spousal beneficiary pick it up as income in the first year of inheriting the IRA and paying RMDs?

Also, what are the distribution options of an inherited ROTH IRAs for a non spousal beneficiary? My understanding is there is a 5 year distribution rule, but is there flexibility – for example – in distributing this as a lump sum at the end of the 5 year period?



Submitted by Alan - IRA critic on Wed, 2022-11-09 21:11

  • Any distribution made to a beneficiary is reportable on a 1099R and tax return for the beneficiary, if even if that distribution includes the IRA owner’s remaining year of death RMD. The owners’s final tax return only includes distributions made by that owner prior to passing.
  • Inherited Roth IRAs fall under the rules of death prior to the RBD, since there is no RBD. Depending on the beneficiary, either the 5 or 10 year rule could apply or life expectancy RMDs. Taxation of such distributions follows the Roth IRA ordering rules if 5 years has not yet passed from the year of the decedent’s first Roth contribution. Roth basis comes out first, tax and penalty free, but if earnings are tapped prior to 5 years, the earnings will be taxable. Therefore, even if the year of the first Roth contribution cannot be determined, once the inherited Roth is held 5 years, it will be automatically qualified and non taxable up to the entire balance.  Prior to completion of 5 years, the beneficiary will have to determine what the Roth IRA basis is in order to know whether a distribution will be taxable. Under the Secure Act, a Roth with a named beneficiary will usually be subject to the 10 year rule, so avoiding distributions the first 5 years will insure that the Roth is qualified and all later distributions are non taxable. The beneficiary no longer needs to know the Roth contribution basis at that point.

Submitted by Taynia Vakapuna on Thu, 2022-11-10 19:11

Thank you so much! 

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