I am a Nonspouse – Noneligible Designated Beneficiary of an IRA that I inherited in 2022. The original owner died in 2022 (born in 1932), and had taken that year's RMD. I was born in 1959. As such, this IRA is subject to the 10-year rule. Last year I took a withdrawal (considered a RMD) of approximately 20% of the balance, and am looking to determine the RMD for 2024. I have found several Inherited IRA RMD calculators, and each of them has produced the same result which is considerably less than 10% of the balance from the end of 2023.
For the purpose of this question, let's assume the following numbers:
Amount inherited from original owner's IRA: $100,000
Balance at end of 2023 after the distribution: $80,000
Today's balance: Approx $88000
RMD for 2024 taken from calculator(s): Approx $3500
Here's my conundrum. Do the annual RMD's increase on a yearly basis in order to deplete the account by the required year, in this case 2032? Or do the RMD's stay the same for years 2 through 10, and then I'd just have a large balance to deplete in 2032? As noted above, the RMD for 2024 is calculated to be about $3500. Due to the nature of the funds it is invested in, the year end balance (currently) increased about 10% which is more than double the (current) RMD. If that trend continues, and unless the RMD's start increasing, the balance in 2032 will be higher than it is now. Is that how this really works? And if so, won't that final withdrawal of funds all be taxable in 2032?
