Ask Terry Questions Required Inherited IRA Distributions

Required Inherited IRA Distributions

By Terry Savage on February 24, 2024 | Financial Planning / Retirement

I recently read an article that was recently published in our local newspaper. It pertained to treatment of Inherited IRA’s and changes because of the SECURE Act. I was a little confused as to when distributions must begin. I originally thought distributions could take place any time and amounts up through the 10th year…..e.g. – distributions all in year 1, or year 10, or any combination in between so long as the total amount is distributed by end of the 10 year. Please confirm if my understanding is correct. Also, please note specific details below:

The Inherited IRA [not a Roth] was a result of my Mother’s death in August 2021:

• My mother had been actively receiving annual IRA distributions from her IRA account prior to death
• In November 2021, I had taken a distribution, as advised this was required for 2021 given my mother had not received her annual distribution
• I was advised that subsequent years did not require me taking a distribution, as long as the inherited IRA was fully distributed by 2031

Please advise if my Inherited IRA account must begin distributions or can wait up until the 10 year.

Thank you and look forward to your response.

Terry Says

This is a very complicated situation. Generally, a designated beneficiary is required to liquidate the account by the end of the 10th year following the year of death of the IRA owner (this is known as the 10-year rule). An RMD may be required in years 1-9 when the decedent had already begun taking RMDs. There are exceptions if the beneficiary is a spouse or a minor child. But since you are an adult and your mother had already started taking RMDs and since she died after 2019, you are required to take an RMD on schedule each year.

This article on the Vanguard website explains it clearly.
And here’s a link to their withdrawal calculator for inherited IRAs.

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