Kiddie Tax and Inherited IRA

[bgoodreau01]

An Intuit response to a parent with 18 and 20 year daughters who have inherited IRA's says the best time for them to withdraw from their Inherited IRA is at age 24 (it is not clear if they are dependents). But that response did not make it clear that is only if they are still dependents. I have a 21 year old grandson who is a full time student with an inherited IRA that files his own taxes (i.e. no longer his parents dependent) on income from summer jobs. Understanding the 10 year withdrawal rule on inherited IRA's, wouldn't it be best taking some or all of that withdrawal now (at age 21) before he graduates and starts earning substantially more? 

[dmertz · Accepted solution]

It generally makes sense to take distributions over 10 years in a way that minimizes the total amount of the distributions that goes to taxes.  Depending on the age of the decedent at the time of death, RMDs might be required under the 10-year rule anyway.