dmertz
Level 15

Retirement tax questions

The new regulations proposed by the IRS earlier this year require that you take annual RMDs base on your life expectancy and completely distribute the IRA by the end of the 2030.  IRS Pub 590-B likely won't be updated to reflect this until the proposed regulations become final later this year.

 

Unless the amount in the inherited IRA is rather small, it probably makes sense to take distributions before the 10th year anyway so that this income doesn't get bumped into a higher tax bracket by taking it all at once.  Also, if the inherited IRA is invested in investments that would be subject to taxation at long-term capital gains rates if held outside the IRA, this is also a reason to get the funds out of the inherited IRA earlier.

 

It doesn't matter how you answer the question that asks how much of the distribution was RMD.  TurboTax only asks to determine how much might be eligible for rollover, but a non-spouse beneficiary is not permitted to roll over any of the distribution anyway.