Does any of my inherited IRA distribution count as RMD if I am on a five-year distribution schedule?

[forest-worker]

Turbo Tax asks if any of the distribution I received was a Required Minimum Distribution, and if so, how much of it was RMD.    I am on a five-year distribution plan, so I'm thinking that none of it is RMD.   Is that correct?  

[ToddL · Accepted solution]

If you are on a "five-year distribution"schedule, then distributions from the inherited IRA are considered "RMDs" and the entire amount of that distribution is an "RMD".

From  RMD rules for inherited IRAs :

RMD calculation methods

The 2 methods to calculate your RMD—that is, how much you must withdraw—are the life-expectancy and 5-year methods. Qualified trust beneficiaries follow unique distribution rules, which are explained below.

Life-expectancy method

The life-expectancy method requires that you withdraw certain amounts from the IRA each year according to IRS calculations. You can withdraw more than the RMD if you wish.

5-year method

The 5-year method requires that you receive the entire balance of the account by the end of the fifth year after the year of your spouse's death.

You may make withdrawals at any time, as long as you redeem the entire account balance by the end of that fifth year. The 5-year method doesn't apply if the account owner dies on or after his or her required beginning date.

[dmertz]

Under the 5-year rule, distributions made before the 5th year following the deceased's year of death are not RMDs.  Still, a non-spouse beneficiary is not eligible to roll over any amounts distributed from the IRA.  (A spouse beneficiary would not be making distributions under the 5-year rule.)

Any amounts distributed during the 5th year following the year of the decedent's death are RMDs and the entire balance of the account is required to have been distributed by the end of that year.  If 2017 is the 5th year following the year of the decedent's death and you failed to completely drain the account by the end of 2017, you will not have completed all of the RMD required for 2017.