This calculator estimates your Required Minimum Distribution (RMD) from an inherited IRA. Consult with a financial advisor for personalized advice.
Your estimated RMD is:
$0.00
Understanding Required Minimum Distributions (RMDs) for Inherited IRAs
When an individual inherits an Individual Retirement Account (IRA), they typically must begin taking Required Minimum Distributions (RMDs) from the account. This rule applies to Traditional IRAs, Roth IRAs (though RMDs are generally not required during the original owner's lifetime, beneficiaries may have to take them), SEP IRAs, and SIMPLE IRAs. The purpose of RMDs is to ensure that tax-deferred retirement savings are eventually taxed.
Who Needs to Calculate RMDs for Inherited IRAs?
Beneficiaries who inherit an IRA from someone who was already subject to RMDs (generally, age 73 or older in 2023 and later, or 72 in 2020-2022, or 70.5 before that) must typically start taking distributions. The rules can differ based on whether the beneficiary is a spouse or a non-spouse, and whether they are an "eligible designated beneficiary."
How is the RMD Calculated?
The calculation for an inherited IRA RMD for a non-spouse beneficiary generally involves three key factors:
The account balance on December 31st of the previous year. This is the starting point for your RMD calculation for the current year.
The beneficiary's age in the current year. You use the beneficiary's age at the end of the year for which you are calculating the RMD.
The IRS Uniform Lifetime Table. This table provides a "life expectancy factor" based on the age of the account holder (or beneficiary, for inherited IRAs).
The formula is as follows:
RMD = (Account Balance on December 31st of Prior Year) / (Life Expectancy Factor from IRS Table)
Using the IRS Uniform Lifetime Table
The IRS provides different tables. For inherited IRAs, the most common tables used are the "Uniform Lifetime Table" or the "Single Life Expectancy Table." For non-spouse beneficiaries, the Single Life Expectancy Table is generally used. This table assigns a number of years corresponding to each age. As the beneficiary gets older, the life expectancy factor decreases, leading to a larger RMD.
Example Calculation
Let's say a beneficiary, Sarah, inherited a Traditional IRA from her mother. Her mother passed away in 2023.
Inherited IRA Balance on December 31, 2023: $150,000
Sarah's Date of Birth: May 15, 1965
Year for RMD Calculation: 2024
First, we need to determine Sarah's age in 2024. Since she was born in 1965, she will be 59 years old for most of 2024. We then look up age 59 on the IRS's Single Life Expectancy Table (Table III in IRS Publication 590-B). Let's assume the life expectancy factor for age 59 is 24.1.
Calculation:
RMD = $150,000 / 24.1 = $6,224.07
Therefore, Sarah's estimated RMD for 2024 is approximately $6,224.07.
Important Considerations:
Spousal Beneficiaries: If the beneficiary is the surviving spouse, they may have additional options, such as treating the inherited IRA as their own or delaying distributions under certain circumstances.
Eligible Designated Beneficiaries (EDBs): EDBs (like children or grandchildren) generally have specific distribution rules. For those inheriting after 2019, the "10-Year Rule" often applies, meaning the entire account must be distributed within 10 years following the year of the original owner's death. RMDs are typically required during the first nine years, with the final distribution in the tenth year. This calculator focuses on the annual RMD calculation based on life expectancy, which may not apply to all EDBs under the SECURE Act.
Year of Death: The year of the original owner's death is crucial for determining when RMDs begin.
Date of Death: While not directly used in this simplified annual RMD formula, the exact date of death can be important for determining the first year RMDs are required.
Accuracy: This calculator provides an estimate. Always refer to IRS Publication 590-B for the most current tables and rules, and consult with a tax professional or financial advisor.