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Tom Vaughan is a Certified Portfolio Manager and CEO of Retirement Capital Strategies. Retirement Capital Strategies is a registered investment advisor located in San Jose, California.

DISCLAIMER: The opinions voiced in these presentations are for general information only and are not intended to provide specific advice or recommendations for any individual(s). The information provided herein is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Tom Vaughan and Retirement Capital Strategies are not responsible for investment actions taken by viewers. For more details, please read our full disclaimer at

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What are the rules for RMD on Inherited IRAs?

Inheriting an Individual retirement account (IRA) can come with its own set of rules and requirements, particularly when it comes to Required Minimum Distributions (RMDs). RMDs are the minimum amount that must be withdrawn from an IRA each year, usually starting at the age of 72 for traditional IRAs.

However, when it comes to inherited IRAs, the rules for RMDs can differ from those of regular IRAs. Here are the key guidelines to understand:

1. Different Options for Different Beneficiaries: The rules for RMDs on inherited IRAs depend on the relationship between the beneficiary and the original account owner. Spouses who inherit an IRA have more choices compared to non-spouse beneficiaries, such as children or other relatives.

2. Spousal Beneficiaries: Spouses who inherit an IRA have the flexibility to treat the inherited account as their own, meaning they can roll it into their own IRA or simply maintain it as an inherited IRA. For spouses who are under 72 years old, RMDs are not required until reaching the age of 72, or if they choose to roll the inherited IRA into their own, the RMD rules for regular IRAs apply.

3. Non-Spousal Beneficiaries: Non-spouse beneficiaries, including children or other relatives, have different RMD requirements. They are generally required to empty the inherited IRA within ten years of the original account owner’s death. The new rules, as of 2020, no longer impose annual RMDs during those ten years, but the entire balance must be withdrawn by the end of the tenth year. This provides more flexibility as to when and how much to withdraw each year.

4. Exceptions for Certain Beneficiaries: There are exceptions to the ten-year rule for some beneficiaries. Eligible designated beneficiaries, such as spouses, minor children, disabled individuals, or chronically ill individuals, can choose to stretch the distributions over their remaining life expectancy. This allows them to take smaller distributions over a longer period.

5. Failure to Take RMDs: Failing to withdraw the required minimum distribution from an inherited IRA may lead to penalties. The penalty amount is typically 50% of the amount that should have been withdrawn.

6. Roth IRAs: Inheriting a Roth IRA has different rules compared to a traditional IRA. Roth IRA owners are not required to take distributions during their lifetime. Spouses who inherit a Roth IRA can treat it as their own or roll it into an inherited Roth IRA. Non-spousal beneficiaries must still empty the account within ten years, but the distributions are tax-free, given that the original account owner had the account for at least five years.

It is crucial to understand the specific rules and requirements that apply to your situation when inheriting an IRA. Consulting with a financial advisor or tax professional can help ensure compliance with the regulations and make informed decisions regarding RMDs from an inherited IRA.