Ask Terry Questions Inherited IRA

Inherited IRA

By Terry Savage on May 16, 2024 | Financial Planning / Retirement

My sister in law died in 2017 and left an IRA to my wife. My wife died at age 78 in 2022. I inherited the IRA BDA. I am trying to find out if I should be on the 5 Year, 10 Year or life expectancy withdrawal schedule. I am 80+ and it appears I’m told to take out less than 10% a year. Your opinion?

Terry Says

Well, your wife likely was taking RMDs from this IRA.  In that case, you would be required to continue taking them on the same schedule.

I’m presuming you rolled this IRA over into an inherited IRA.  In that case, you must begin taking an annual RMD over your life expectancy beginning no later than 12/31 of the year following the original account holder’s death.

Note: If the original account holder did not take an RMD in the year of death, an RMD must be taken from the account by 12/31 of the year the original account holder died.

Then it gets complicated!  Basically, If you inherit the IRA,  you may have to take RMDs every year (if you choose the life-expectancy distribution method instead of the ten-year method).

But the exception is if your spouse had already started taking RMDs.   There are so many variables that I understand why you are confused.  I am, too!  So I suggest you consult the IRA custodian — and I hope it is a sophisticated custodian like Vanguard or Fidelity.   Get their advice in writing.

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