Do you know how to calculate your RMD from the IRA you inherited? Watch to learn more.
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A required minimum distribution (RMD) is the minimum amount of money that must be withdrawn from a retirement account each year once the account owner reaches a certain age. When it comes to an inherited IRA, the rules for calculating and taking RMDs can be a bit different than with a traditional IRA.

If you have inherited an IRA from a deceased loved one, you will need to calculate your RMD based on your age and life expectancy. The first thing you will need to determine is whether you are a designated beneficiary or a non-designated beneficiary. Designated beneficiaries are typically spouses, minor children, or individuals with a life expectancy that is within 10 years of the deceased account owner.

If you are a designated beneficiary, you can calculate your RMD using the Single Life Expectancy Table provided by the IRS. This table will give you a distribution factor based on your age and life expectancy. To calculate your RMD, you will divide the account balance by your distribution factor.

For non-designated beneficiaries, such as estates or charities, the RMD must be taken over a maximum period of 5 years following the year of the account owner’s death.

It’s important to remember that failing to take the required minimum distribution from an inherited IRA can result in hefty penalties from the IRS. It’s crucial to stay on top of your RMDs and make sure you are withdrawing the correct amount each year.

retirement planning can be a complex and overwhelming process, especially when it comes to inherited accounts. Consulting with a financial advisor or tax professional can help ensure that you are calculating your RMD correctly and planning for your retirement needs effectively.

In conclusion, calculating an inherited IRA RMD involves understanding your beneficiary status, utilizing the appropriate IRS tables, and making sure you are taking the correct distribution each year. By staying informed and seeking expert advice, you can navigate the complexities of inherited IRA RMDs and ensure that you are meeting your obligations as a beneficiary while maximizing the benefits of the account.