INHERITED IRA S
What to do with them...
Whether you are planning to leave behind an IRA account as part of an
inheritance or have recently inherited an IRA, there are a few things to
consider. It is not always possible to simply take the account as your own. What
can be done with an inherited IRA depends on the relationship between the
original account owner and the beneficiary, and whether or not the original
owner had started withdrawing from the IRA.
SPOUSEBENFICIARY
IRA OWNER HAS STARTED TAKING RMD
4
IRA OWNER HAS NOT STARTED TAKING RMD
OPTION 1
OPTION 2
OPTION 3
OPTION 1
OPTION 2
OPTION 3
Take the IRA as
your own
Distribute the
funds over the 1
span of your life.
Distribute funds
based on the RMD
table using the
original owner's
age as of their
birthday on year of
death 2
Take the IRA as
Withdraw the
entire balance of
the account by the
end of the 5th year
following the year
of death
Distribute the
funds based on
your age 3
your own
NON-SPOUSEBENFICIARY
IRA OWNER HAS STARTED TAKING RMD
4
IRA OWNER HAS NOT STARTED TAKING RMD
Distribute the funds
2
based on the RMD table
Use younger of
a) beneficiary's age
or b) owner's age
at birthday in year
of death
Determine
beneficiary's age at
year-end following
the original
owner's death
Use the oldest
age for multiple
beneficiaries
OPTION 1
OPTION 2
Withdraw the
entire balance of
the account by the
end of the 5th year
following the year
of death
Distribute the
funds based on the
RMD table using
the beneficiaries
age at year-end
following the
owner's death
OPTION 3
The inherited IRA
must be depleted
within a 10 year
period. If the
beneficiary is a
minor, refer to the
RMD table until age
of majority, then 10
year rule applies. 5
ESTATE/CHARITY/TRUSTBENFICIARY
IRA OWNER HAS STARTED TAKING RMD
4
IRA OWNER HAS NOT STARTED TAKING RMD
Distribute funds based
on the RMD table using
the original owner's
age as of their birthday
on year of death 2
Withdraw the entire
balance of the account
by the end of the 5th
year following the year
of death
REQUIRED MINIMUM DISTRIBUTION (RMD)
FOR IRA BENEFICIARIES
Age
Divisor
Age
Divisor
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
77.7
76.7
75.8
74.8
73.8
72.8
71.8
70.8
69.9
68.9
67.9
66.9
66.0
65.0
64.0
63.0
62.1
61.1
60.1
59.1
58.2
57.2
56.2
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
55.3
54.3
53.3
52.4
51.4
50.4
49.4
48.5
47.5
46.5
45.6
44.6
43.6
42.7
41.7
40.7
39.8
38.8
37.9
37.0
36.0
35.1
34.2
The RMD table uses life expectancies to
determine the yearly distribution of an
owner's IRA account
The required minimum distributions change
yearly as the owner ages, this is to adjust for
the statistical probability that the owner will
live longer as they age
RMDs do not have to begin until the owner
turns 72 1/2 but can start as early as 59 1/2
RMD = IRA Holdings/Divisor
1
2
3
4
5
Use the beneficiary's age each year to determine the divisor
Use the beneficiary's age each year to determine the divisor, and
Reduce the divisor (life expectancy) by 1 each subsequent year
RMDs do not have to begin until the owner would have been 72
Can Always take owner's RMD for the year of death
Does not apply if beneficiary is disabled or if there is less than
10 year age gap between the owner and the beneficiary
1/2