Do I Need To Take Distributions Inherited IRA?

Yes, you’ll have to take distributions from an inherited IRA by a certain deadline, regardless of whether it’s a traditional or Roth IRA. The amount you must take from the inherited IRA and the deadline to take it vary depending on the beneficiary.

If the original owner died after Dec. 31, 2019, most beneficiaries must deplete the inherited IRA by the end of the 10th calendar year after the original owner’s death, which is often referred to as the 10-year rule. Minimum annual distributions are not required during the 10-year period if the original owner passed before they had to begin taking required minimum distributions (RMDs). However, if the original owner died after they had to begin RMDs, there are proposed regulations that would require the beneficiary to take RMDs during the 10-year period.

While any individual beneficiary can elect to take distributions under the 10-year rule, certain beneficiaries have other options:

You inherited the IRA from your spouse. You have the most options when it comes to an inherited IRA. You can: Roll the inherited IRA into an IRA in your own name. Delay taking RMDs until the original owner would have reached 73 (if the original owner passed before they had to begin RMDs). Take RMDs based on your own life expectancy or the original owner’s life expectancy, whichever is greater, if the original owner passed after they had to begin RMDs.

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You’re a minor child of the original owner. You can take RMDs based on your own life expectancy until you reach the age of majority. Upon reaching the age of majority, the 10-year rule kicks in and you must deplete the inherited IRA by the end of the 10th calendar year after reaching the age of majority. While not yet final, the age of majority under the proposed regulations is 21.

You’re chronically ill or disabled. You can take RMDs based on your own life expectancy. If the original owner passed after they had to begin RMDs, you also have the option to take RMDs based on the original owner’s life expectancy. To qualify, you must meet the definition of chronically ill or disabled on the original owner’s date of death.

You’re no more than 10 years younger than the original owner. You can take RMDs based on your own life expectancy. If the original owner passed after they had to begin RMDs, you also have the option to take RMDs based on the original owner’s life expectancy.

Call or contact Danny Favreau if you have any questions to Inherited IRA.

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