Are RMDs Required for Inherited IRAs in 2022?
In 2022, the question of whether Required Minimum Distributions (RMDs) are required for inherited IRAs has become a topic of significant interest among retirement account holders and estate planners. Understanding the rules surrounding RMDs for inherited IRAs is crucial for individuals who have inherited an IRA from a deceased account holder, as it can have a significant impact on their tax obligations and financial planning.
Understanding RMDs for Inherited IRAs
Firstly, it’s important to clarify that RMDs are generally required for traditional IRAs, but the rules for inherited IRAs can be different. For inherited IRAs, the rules depend on the relationship between the original account holder and the inheritor. If the original account holder passed away before the year they would have turned 72, the rules for RMDs can vary.
Spousal Inheritors and RMDs
For spousal inheritors, the rules are somewhat different from non-spousal inheritors. If the deceased account holder was married at the time of death, their surviving spouse can either take RMDs based on their own life expectancy or roll over the inherited IRA into their own IRA. This provides flexibility for the surviving spouse, as they can choose to delay taking RMDs until they reach the age of 72.
Non-Spousal Inheritors and RMDs
For non-spousal inheritors, such as children, grandchildren, or friends, the rules are more stringent. Non-spousal inheritors must begin taking RMDs from the inherited IRA in the year following the year of the original account holder’s death. The RMDs are calculated based on the inheritor’s life expectancy, as determined by the IRS life expectancy tables.
Exceptions to RMD Requirements
While RMDs are generally required for inherited IRAs, there are some exceptions. If the original account holder passed away before the age of 72, the inheritor may not be required to take RMDs until the year following the year they would have turned 72. Additionally, if the original account holder passed away as a result of a qualifying event, such as a disability or death, the inheritor may also be exempt from RMDs for that year.
Conclusion
In summary, whether RMDs are required for inherited IRAs in 2022 depends on the relationship between the original account holder and the inheritor. Spousal inheritors have more flexibility in managing RMDs, while non-spousal inheritors must adhere to strict rules. It is essential for individuals who have inherited an IRA to consult with a financial advisor or tax professional to understand their specific situation and ensure compliance with the applicable RMD rules. By doing so, they can make informed decisions regarding their inherited IRA and minimize potential tax liabilities.
