My dad passed away in Feb 2023 leaving me and my brother as beneficiaries of his Trad IRA (50/50 split).
His RMD for 2023 was ~$11,000.00 and he received IRA distributions in Jan and Feb reducing his 2023 RMD amount to ~$8000.00.
Question #1: How much do I have to withdraw for the remainder of 2023?
Question #2: I know about the 10-year rule and I am not an eligible designated beneficiary. How do i calculate RMDs going forward? Is it based on my age or my dad's age?
thanks
1. You and your brother have a combined responsibility to satisfy the remaining $8,000 of your father's 2023 RMD. The two of you can take distributions from your respective shares in any combination to achieve that. If the absence of an agreement to do otherwise, each of you would take 50% of the remaining 2023 RMD.
2. Assuming that 2023 was not your father's first RMD year, you and your brother must take annual RMDs. If the inherited IRA is split into separate accounts for your share and your brother's share by December 31, 2024, the annual beneficiary RMDs beginning in 2024 are based on each beneficiary's Single Life Expectancy (Table I in IRS Pub 590-B) and the beneficiary's age in 2024, reduced by 1 each subsequent year. If the inherited IRA is not split by that deadline, the RMDs for both of you are calculated based on the oldest of the two of you.
Because the inherited IRAs must be fully drained by the end of year 10 (December 31, 2033), it likely makes sense for you to take out more than your RMD each year so that you do not end up with a large spike in taxable income in year 10 when any remaining amount must be distributed. It might even make sense to distribute more than the remaining portion of your father's 2023 RMD in 2023, spreading the income over 11 years instead of 10. Also be aware that tax rates are schedule to revert to the higher 2017 levels in 2026, so that could factor into your calculations.
1. You and your brother have a combined responsibility to satisfy the remaining $8,000 of your father's 2023 RMD. The two of you can take distributions from your respective shares in any combination to achieve that. If the absence of an agreement to do otherwise, each of you would take 50% of the remaining 2023 RMD.
2. Assuming that 2023 was not your father's first RMD year, you and your brother must take annual RMDs. If the inherited IRA is split into separate accounts for your share and your brother's share by December 31, 2024, the annual beneficiary RMDs beginning in 2024 are based on each beneficiary's Single Life Expectancy (Table I in IRS Pub 590-B) and the beneficiary's age in 2024, reduced by 1 each subsequent year. If the inherited IRA is not split by that deadline, the RMDs for both of you are calculated based on the oldest of the two of you.
Because the inherited IRAs must be fully drained by the end of year 10 (December 31, 2033), it likely makes sense for you to take out more than your RMD each year so that you do not end up with a large spike in taxable income in year 10 when any remaining amount must be distributed. It might even make sense to distribute more than the remaining portion of your father's 2023 RMD in 2023, spreading the income over 11 years instead of 10. Also be aware that tax rates are schedule to revert to the higher 2017 levels in 2026, so that could factor into your calculations.