What Are the Rules Regarding Required Minimum Distributions for Inherited IRAs?


Quick Answer

Non-spouse inheritors of IRAs must initiate required minimum distributions by December 31 of the year after the owner of the IRA account dies, reports Forbes. Spouses inheriting IRAs have the option of initiating required minimum distributions as beneficiaries or rolling over the funds into their own IRAs, states the IRS.

Continue Reading
Related Videos

Full Answer

Non-spouses who inherit IRAs have the option of withdrawing all the money at once, receiving the distribution over a five-year period or spreading the distributions over their expected lifetimes as determined by an IRS life expectancy table, according to U.S. News & World Report Money. Spreading the distributions over a lifetime is the most tax-beneficial approach. If the inheritor does not withdraw at least the first required minimum distribution within the deadline of December 31 of the year after the death of the account holder, the IRS levies an excise tax penalty of 50 percent of the amount that should have been distributed. If the decedent should have received a distribution payment during the calendar year of death, the inheritor must take that distribution, or the IRS collects the 50 percent penalty tax on it.

Spouses of deceased IRA owners do not need to initiate required minimum distributions immediately, states U.S. News & World Report Money. They can wait to begin receiving distributions or roll over the funds until the decedent account holder would have reached age 70 1/2.

Learn more about Taxes

Related Questions