Beneficiary Ira Rmd Calculator

Inherited Account Balance (as of Dec 31st of previous year):

Beneficiary's Age (at the end of current year):

Calculation Result

Your Required Minimum Distribution (RMD) is:

IRS Life Expectancy Factor (Table I):

Understanding Beneficiary IRA RMD Rules

Inheriting an Individual Retirement Account (IRA) comes with specific tax obligations. The most critical is the Required Minimum Distribution (RMD). This is the minimum amount the IRS requires you to withdraw from the account each year to ensure tax revenue is collected. Failing to take an RMD can result in a penalty of up to 25% of the amount not withdrawn.

The SECURE Act and the 10-Year Rule

Since January 1, 2020, rules for non-spouse beneficiaries have changed significantly. Most non-spouse beneficiaries must now withdraw all assets from the inherited IRA within 10 years of the original owner's death. However, "Eligible Designated Beneficiaries" (EDBs) can still use the "Life Expectancy Method" calculated by this tool. EDBs include:

Surviving spouses.
Disabled or chronically ill individuals.
Individuals not more than 10 years younger than the deceased.
Minor children of the deceased (until they reach the age of majority).

How the Calculation Works

To calculate your RMD using the Life Expectancy Method, the IRS provides a Single Life Expectancy Table (found in Publication 590-B). The formula is simple:

            Annual RMD = Prior Year-End Balance / Life Expectancy Factor
        

Example Calculation

Suppose you inherited an IRA and the balance on December 31st of last year was $250,000. You are turning 55 this year. According to the IRS Table I:

Identify Life Expectancy Factor: For age 55, the factor is 31.6.
Apply Formula: $250,000 / 31.6 = $7,911.39.
Result: Your RMD for the current year is $7,911.39.

Important Tips for Beneficiaries

Spousal Beneficiaries: Spouses have the option to roll the inherited IRA into their own IRA, effectively treating it as if they were the original owner.
Multiple Beneficiaries: If an IRA is split into separate accounts by December 31 of the year following death, each beneficiary can use their own life expectancy.
Charitable Giving: If you are over age 70½, you may be able to satisfy your RMD through a Qualified Charitable Distribution (QCD), which can be tax-advantageous.