Inherited IRAs and Qualified Charitable Distributions: Today’s Slott Report Mailbag

Thursday, April 25, 2024

By Sarah Brenner, JD
Director of Retirement Education
Follow Us on X: @theslottreport

Question:

My brother died in 2020 and made me the beneficiary of an IRA he inherited from my sister who died in 2017. Can I continue to stretch the payments from this inherited IRA? If not, how soon do I have to empty it? 

Thanks,

Dave

Answer:

Hi Dave,

It sounds like you are a successor beneficiary on this inherited IRA. Your brother was the original beneficiary, and he would have been eligible to use the stretch.

You inherited after the SECURE Act, so as a successor beneficiary you are subject to the 10-year rule and must empty the account by the end of 2030. Under the IRS proposed regulations, you would be required to continue the annual RMDs that your brother was taking when he was the beneficiary and subject to the stretch. However, due to continued confusion over the regulations, those RMDs have been waived by the IRS for years 2021 through 2024.

Question:

I am beneficiary of an IRA inherited from my father who died over 10 years ago. I’ve been taking RMDs as required. Since I’m over age 70 ½, I did some QCDs. I received proper documentation from the charities.

I use tax software to prepare my taxes.  It’s not allowing me to recognize the QCDs. Is there a problem with my doing a QCD from an inherited IRA?

Thanks for your help!

Answer:

There is no problem with doing a QCD from an inherited IRA. If you a beneficiary who is over age 70 ½, that is allowed.

It is hard to say what the problem is with the tax software. There is nothing on the Form 1099-R which the IRA custodian generates when a QCD is done that would distinguish a QCD from any other distribution. You must claim the QCD on your tax return. Most tax software programs should be able to handle this.

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