Multiple, Inherited IRAs and RMDs

[TobyMeister]

Hi TurboTax Community,

I inherited two (2) IRAs from my Dad when he died last December (2023).

I think these are subject to Required Minimum Distributions (RMDs) and the new 10-year depletion rule for inherited IRAs.  The accounts need to be emptied within 10 years.

One IRA is worth $10,000 and the other one is worth $50,000.  The total combined value is $60,000.

What is my RMD requirement for 2024?  Is my RMD $6,000 ($60,000 divided by 10 years)?

And, can my RMD in 2024 be satisfied by withdrawing $6,000 from either account, or does the RMD have to come from each account?  $1,000 withdrawn from one IRA and $5,000 withdrawn from the other?

Am I asking this right?  Does my question make sense?

Thanks.  Toby

[fanfare]

If your father had reached his Required Beginning Date for RMD.

then you also have to take at least your RMD each year 

@TobyMeister 

[Opus 17]

First, if your father was older than his RMD beginning age, and did not take his RMD for 2023, you have to take that for him, based on his statistical life expectancy according to the tables in publication 590-B.   (But remember, an RMD is just an amount, not a specific transaction.  So if we assume his RMD was $5000, that could be satisfied by withdrawing $5000 all at once, but it would also have been satisfied by withdrawing $450 per month over 12 months.)

If your father was not older than his RMD beginning age, you do not have to take RMDs at all, you just have to empty the accounts by the end of the 10th year after his death (Dec 31, 2033).

If your father was older than his RMD beginning age, then you must take RMDs based on your age starting in 2024.  Or rather, you base your RMD on your life expectancy.  Suppose your life expectancy this year is 30 years.  Your RMD is 1/30 (3.33%) of the IRA balance.  There are several life expectancy tables in IRS publication 590-B, and I don't know which table you should use, because the IRS has only just finalized these regulations and the publication is not updated yet.  But @dmertz will know which table to use.

https://www.irs.gov/publications/p590b#en_US_2023_publink100090423

If you must take his RMD for 2023 now (late, in 2024), you have report the missed RMD on your 2023 tax return.  There is a penalty but you can request a waiver, it is almost always granted.  Then you still need to also take your own RMD in 2024.

[rjs]

RMDs and the 10-year rule are two separate requirements. You have to satisfy both requirements.

An RMD is a minimum amount that you must take out of the account each year. The amount that you must withdraw each year is based on the IRS life expectancy tables, as Opus 17 outlined. The RMD is not 1/10 of the balance.

The 10-year rule requires that you take all of the money out of the account by the end of the 10th year following the original account owner's death. There is no specific amount that you have to take out each year, as long as the account is empty by the end of the 10th year. You do not have to take out 1/10 of the balance each year.

You have to take out at least the RMD amount each year. You can take out more if you want to. You might want to do that so that you are not left with a large balance that you have to take out, and pay tax on, in the 10th year. The annual RMDs alone will probably not be enough to empty the account in 10 years. Taking out 1/10 of the starting balance each year is a good way to spread out the withdrawals, and the tax, over the 10 years. But you also have to make sure that the amount you take out each year is at least the RMD amount. The RMD could be larger or smaller than 1/10 of the balance.

You can add up the RMDs for the two inherited IRAs and take the total from either account, or part of it from one account and part from the other, dividing it in any way that you like, as long as both IRAs were inherited from the same person. You cannot combine the RMDs for the IRAs inherited from your father with any other IRAs.

[dmertz]

I assume that these are traditional IRAs, not Roth IRAs.

If your father died after his RBD, your annual RMDs under the 10-year rule are based on your life expectancy from the Single Life Expectancy table based on your age attained in 2024 reduced by 1 each subsequent year.  As other's have said, the table is in IRS Pub 590-B.

The penalty for not taking the RMD in 2024 has been waived, so you don't have to take the 2024 RMD (if subject to RMDs), but you might still want to take more than the RMD each year to avoid a large distribution required to completely deplete the account in year 10.

With both inherited IRAs coming from the same decedent and subject to the same RMD requirements, the total RMD for each year can be satisfied with distributions from either account in any combination.

[Opus 17]

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@dmertz wrote:

If your father died after his RBD, your annual RMDs under the 10-year rule are based on your life expectancy from the Single Life Expectancy table based on your age attained in 2024 reduced by 1 each subsequent year.  As other's have said, the table is in IRS Pub 590-B.

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@TobyMeister 

That's going to be appendix B, table 1, starting on page 48 here.

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