Inherited IRA Distributions 2020

[js_999]

Will income taken as a distribution from an Inherited IRA in 2020 qualify to be spread over a 3 year period 2020-2023 in the way available to standard IRAs under the CARES act? 

For a standard IRA if you certify hardship from COVID-19 you can take 100k from an account.  Pay it back tax free within 3 years, OR spread the income over a 3 year period and pay the taxes.    What I cannot find anywhere is an answer to whether inherited IRAs will be treated the same way. 

Thank you. 

[dmertz]

Not entirely.  Like a Coronavirus-Related Distribution (CRD) from your own IRA, you can only do this if you are eligible to receive a CRD and you have the option to spread this income in equal parts over 2020, 2021 and 2021 or to include the entire amount in 2020 income.  However, a non-spouse beneficiary is not permitted to repay the distribution back to the inherited IRA (or any other IRA).  A beneficiary who is the surviving spouse can pay it back to their own IRA.

The provisions in the CARES Act for CRDs mirror those for qualified disaster distributions.  See Chapter 3 of IRS Pub 590-B regarding qualified disaster distributions.

[js_999]

So - the inference is then.... that since this is a NON-Spouse Inherited IRA it could never be paid back.  And therefore looks to be outside the parameters of this provision from the start.  Got it.  

Thanks!  

[dmertz]

It might still be advantageous to treat a distribution between January 1 and December 30 from the inherited IRA as a CRD, if eligible, since that would allow the tax liability to be spread over 3 years.