Inherited IRA with total distribtion

[Jeff176]

My wife received a total distribution from an inherited IRA after her dad passed away. I entered it as a total distribution with code 4 for death as on the 1099R. Turbo Tax asks me what portion of the distribution is a RMD? The amount was for $9491.57. Since it's a total cash out, how do I answer the RMD question? If I enter the full amount, will TT be looking for another RMD next year?

[Opus 17]

Turbotax needs to know the amount that was the required distribution because there are certain things you can't do with that part of the money (like roll it over into another IRA).  It won't have any effect in the future.

If the father died in 2024 and was older than his beginning age, and had not withdrawn his own RMD yet, then your wife was required to take his RMD.  His RMD would be the balance as of 12/31/2023 divided by his life expectancy factor from Appendix B, Table III, page 65 of IRS publication 590-B.

https://www.irs.gov/pub/irs-pdf/p590b.pdf

In any other situation, your wife's RMD for 2024 was zero, either because she had no requirement, or because the IRS waived the requirement.  It depends on several facts but I won't go into them unless you ask, since either way it would be zero for 2024.

[Jeff176]

He passed away in December of 2023 and had taken his required RMD's for 2023. The account was split 3 ways between her and her 2 sisters. My wife received her share in 2024 and it was deposited into a bank account and not rolled over into an IRA. 

[DianeW777]

Follow the instructions below and If you still have the question about the RMD you should say 'yes'.

Beneficiaries of an IRA, and most plans, have the option of taking a lump-sum distribution of the inherited account at any time. Beneficiaries must include any taxable distributions they receive in their gross income.

When you enter the 1099-R in your return, you will reach the page 'Do any of these situations apply to you?' be sure to check the box beside 'I inherited this IRA'.  This will eliminate any penalty. 

If your father-in-law did not have any previous 'nondeductible' contributions (not common)  then the full distribution is taxable.

• Retirement Topics-Beneficiaries

@Jeff176 

[Opus 17]

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@Jeff176 wrote:

He passed away in December of 2023 and had taken his required RMD's for 2023. The account was split 3 ways between her and her 2 sisters. My wife received her share in 2024 and it was deposited into a bank account and not rolled over into an IRA. 

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In this situation, your wife is required to take a 2024 RMD, based on her life expectancy, so if she took a total distribution, part of that is considered the RMD.  However, because the rules on RMDs from inherited IRAs were not finalized until 2024, the IRS has waived the penalty for not taking an RMD for 2024.  So you would be safe in saying there was no RMD.

If you want to calculate the actual RMD, use your wife's age and table 1 in appendix B of publication 590-B. 

https://www.irs.gov/forms-pubs/about-publication-590-b

For example, if she was 50 years old in 2024, her life expectancy is 36.2 years.  So her RMD would be the 2023 year end balance of the inherited IRA divided by 36.2.