Inherited IRA Required Minimum Distributions (RMDs)

Inherited an IRA account does not preclude one from taking annual withdrawals. The IRS recently enacted new rules and guidelines on taking withdrawals. The “old rules” used to look similar to a normal RMD for an owner. Now, the government allows you to spread the withdrawals over 10-years as long as the account is emptied, or all funds withdrawn, by year 10. It used to be that the beneficiary could stretch mandatory withdrawals over their lifetime, but there is now a 10-year cap. It is key to work with your financial professional and tax prepare when determining how much and how often to take a withdrawal from an inherited IRA. There can be planning opportunities if you anticipate a low-income tax year. Others who anticipate consistent tax brackets choose to spread withdrawals evenly over the 10-year period. 

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The information contained herein is based on our understanding of current tax law. The tax and legislative information may be subject to change and different interpretations. We recommend that you seek professional legal advice for applicability to your personal situation. As required by the IRS, you are advised that any discussion of tax issues in this material is not intended or written to be used, and cannot be used, (a) to avoid penalties imposed under the Internal Revenue Code or (b) to promote, market or recommend to another party any transaction or matter addressed herein.