Do You Have a Required Distribution From Your Inherited IRA?

Do You Have a Required Distribution From Your Inherited IRA?

SDRandCo (31)Did you inherited IRA? Was the person you inherited it from over the age of 70 ½? If yes, then you may need to take a year of death distribution. If the deceased account owner did not take all of his required minimum distribution (RMD) for the year, the beneficiaries must take any remaining RMD by the end of the year. The RMD does not go to the decedent or to his estate. It is calculated as though the account owner lived for the entire year. A non-spouse beneficiary’s own RMD will begin in the year after the IRA owner’s death. The beneficiary can use his/her own life expectancy to calculate the RMDs.

The inherited IRA belongs to the beneficiaries as soon as the account owner dies. The beneficiaries must take any RMDs that are due. The penalty for a missed RMD is 50%.

Your IRA custodian may automatically re-title the account or require that the account be split by the beneficiaries before making any distributions. Generally this is to ensure that the tax reporting is done correctly.

So be sure to take those RMDs from your inherited IRAs before year-end. If you miss the deadline, you should take the RMD as soon as possible. You can request a waiver of the penalty for reasonable cause. Contact a professional immediately if you missed the RMD.

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