I inherited an IRA from a non spouse in Q4 of 2020. I turned 58 in 2021 and am permanently disabled receiving Social Security Disability. I elected to take my 2021 RMD using the single life expectancy table, since I was not subject to the 10 year distribution SECURE Act new RMD rules for inherited IRA's
I received my 2021 1099-R from the brokerage holding the inherited IRA. It shows my RMD and Distribution Code 4 (Death). There are no additional distribution codes. I was previewing my 2021 tax return 1040 forms and I do not see any designation indicating that I am disabled. I do not qualify for the Elderly and Disabled Credit due to my AGI.
I'm concerned that I will receive a letter from the IRS indicating that I have not taken a large enough RMD, since I used the single life expectancy table, since I am disabled. Should I include Schedule R - Credit for the Elderly and Disabled with my return showing a zero credit, but still personally certifying that I am disabled?
Thank you
Rob
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No, it is not necessary to include Schedule R. As far as I am aware, there are no disability considerations in determining an RMD distribution for an inherited IRA. Please refer to this IRS post to help clarify required Minimum Distributions for IRA Beneficiaries.
To be an eligible designated beneficiary:
"You are totally and permanently disabled."
"You are considered disabled if you can furnish proof that you can't do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration."
There most certainly is a consideration for Inherited IRAs if you want to use this exception to the 10-year Rule.
Hi DaveF,
The RMD disability exemption for the length of time to take distributions after the original account owner dies is explained in Publications 590B, as well as the IRS web site. Here is alink to this information
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-di...
"Generally, for individuals or employees with accounts who die after December 31, 2019, the SECURE Act distinguishes between an “eligible designated beneficiary” and other beneficiaries who inherit an account or IRA. An eligible designated beneficiary includes a surviving spouse, a disabled individual, a chronically ill individual, a minor child, or an individual who is not more than 10 years younger than the account owner. Certain trusts created for the exclusive benefit of disabled or chronically ill beneficiaries are included. These eligible designated beneficiaries may take their distributions over the beneficiary's life expectancy. However, minor children must still take remaining distributions within 10 years of reaching age 18. Additionally, a surviving spouse beneficiary my delay commencement of distributions until the later of the end of the year that the employee or IRA owner would have attained age 72, or the surviving spouse’s required beginning date."
Yes, fanfare pointed out that I did miss this in my original answer. According to the link you sent, you are a "designated beneficiary" that is an exception to the 10-year rule. My apologies for missing this in my original answer and thank you so much for sending this.
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