When do I have to take RMD from inherited IRA? This is a common question among individuals who have inherited an IRA from a deceased loved one. Understanding the rules and regulations surrounding Required Minimum Distributions (RMDs) from inherited IRAs is crucial to ensure compliance with tax laws and avoid penalties. In this article, we will delve into the key aspects of RMDs from inherited IRAs and provide you with the information you need to know.
The rules for taking RMDs from inherited IRAs vary depending on the type of IRA and the relationship between the deceased account owner and the beneficiary. Generally, there are two types of inherited IRAs: traditional IRAs and Roth IRAs.
For traditional IRAs, the rules for RMDs are as follows:
1. If the deceased account owner passed away before the year they would have turned 72, the RMD rules do not apply until the year they would have turned 72. This means that if the deceased was 70 years old when they passed away, the RMD would not be required until the year they would have turned 72.
2. If the deceased account owner passed away after the year they would have turned 72, the RMD rules apply for the year of death and each subsequent year. The RMD for the year of death is calculated based on the account balance as of December 31 of the previous year.
3. If the deceased account owner passed away before the year they would have turned 72, the RMDs for the inherited IRA must be taken by the end of the fifth year following the year of death.
For Roth IRAs, the rules for RMDs are slightly different:
1. If the deceased account owner passed away before the year they would have turned 72, the RMD rules do not apply until the year they would have turned 72. However, the Roth IRA does not require any RMDs during the owner’s lifetime.
2. If the deceased account owner passed away after the year they would have turned 72, the RMD rules apply for the year of death and each subsequent year, just like with traditional IRAs.
3. If the deceased account owner passed away before the year they would have turned 72, the RMDs for the inherited Roth IRA must be taken by the end of the fifth year following the year of death.
It is important to note that certain exceptions may apply to these rules, such as if the beneficiary is a surviving spouse, a minor child, or a disabled or chronically ill individual. In these cases, the RMD rules may be different.
To ensure compliance with RMD rules for inherited IRAs, it is advisable to consult with a tax professional or financial advisor. They can help you navigate the complexities of these rules and ensure that you are taking the correct RMDs at the appropriate times.
In conclusion, the answer to the question “When do I have to take RMD from inherited IRA?” depends on various factors, including the deceased account owner’s age, the type of IRA, and the relationship between the deceased and the beneficiary. By understanding these rules and seeking professional advice when necessary, you can avoid penalties and ensure that you are fulfilling your tax obligations.
