If you inherited IRA and, you may be required to take a withdrawal from the IRA each year. The amount you are required to withdraw depends on factors such as your age, whether the beneficiary is a spouse, and the type of IRA you are withdrawing from.

If you inherited an IRA from a spouse, more commonly, you may transfer the balance into your own IRA and treat the balance as your own. Spouse and non-spouse beneficiaries can also decide to remove the funds from the IRA as a one-time lump sum payment. If you forgo these alternatives and have converted the account into a Beneficiary IRA, minimum distributions will be required following through one of two distribution methods.

 

	Life Expectancy Method				5 year Method
	Tradition IRA - Spouse Inherit	Tradition IRA - Non-Spouse Inherit	Roth IRA - Spouse Inherit	Roth IRA - Non-Spouse Inherit	Tradition IRA - Spouse Inherit	Tradition IRA - Non-Spouse Inherit	Roth IRA - Spouse Inherit	Roth IRA - Non-Spouse Inherit
When do distributions start	Distributions must begin no later than 12/31 of the year the account holder would have reached 70½.	Distributions must begin no later than 12/31 of the year after the account holder died.	Required Minimum Distributions (RMDs) are mandatory and you have the option to postpone distributions until the later of: When the decedent would have attained age 70½, or December 31 of the year following the year of death.	Required Minimum Distributions (RMDs) are mandatory and distributions must begin no later than 12/31 of the year following the year of death.	At any time up until 12/31 of the fifth year after the year in which the account holder died, at which point all assets need to be fully distributed.
How much do I need to withdraw	Calculate using life expectancy model*				Withdrawals are amounts are self-directed, so long as the entire amount is withdrawal within 5 years
Do I pay taxes on distributions?	Taxable distributions are included in your gross income.		Withdrawals are tax-free so long as the IRA is older than 5 years		Taxable distributions are included in your gross income		Withdrawals are tax-free so long as the IRA is older than 5 years

 

Calculating your RMD using the Life expectancy Model

1. Determine what age to use

Using the IRS Chart of required minimum distributions for IRA beneficiaries to determine what age will be used for your RMD calculation. Match the selected age on Table 1 of the Single Life Expectancy in Appendix B of Publication 590-B from the IRS to determine your life expectancy factor.

2. Calculate your RMD

Fill in the Appendix A of the IRS RMD worksheet using the value of your IRA from December 31 of the year immediately prior to the distribution, and the life expectancy factor from the previous step.

 

When you're ready, you can initiate your required minimum distribution on the Withdrawals Page of your account. If you require any assistance with your RMD calculation, please contact us.