Table of Contents

Inherited IRA - Required Minimum Distribution (RMD)

Eric Updated by Eric

This module calculates the Required Minimum Distribution (RMD) for inherited IRAs and is based on the IRS Pub 590-B life expectancy divisor tables, the SECURE Act from December 2019, and the SECURE Act 2.0 from December 2023. It also computes RMD’s for IRA owner deaths between 01/01/02 and 12/31/2019. Depending on the circumstances, there may be a number of other withdrawal options available to the beneficiary(ies) that provide a faster withdrawal of funds. This module is only concerned with the Required Minimum Distribution (RMD).

Non-eligible Designated Beneficiaries
Prior to the Secure Act(s), IRA beneficiaries were generally eligible to stretch IRA RMD’s over their life expectancies. In the Secure Act(s) era, beneficiaries fall into 2 general categories, with the exception of sole-beneficiary spouses: “Eligible” or “Non-Eligible”.

Non-eligible RMD’s are due beginning the year after IRA owner’s death if the IRA owner had reached their Required Beginning Date for RMD’s, and this calculation is the same as if they were an eligible beneficiary.

Pre-Secure Acts, IRA beneficiaries were generally eligible to “stretch” IRA RMD’s over their life expectancies. Since the tax law changes (with the exception of sole-beneficiary spouses), beneficiaries fall into 2 general categories: “Eligible”or “non-Eligible”.

Although the ENTRY SCREEN has no checkbox yet for a “non-Eligible” beneficiary, RMD’s are due (beginning the year after IRA owner’s death) IF the IRA owner had reached their Required Beginning Date for RMD’s. This RMD calculation is the SAME as if they were an Eligible beneficiary--so Checkbox 2 can be utilized. Be sure to read the rest of this Help Article for more information.

The calculations in this module are dependent on a number of conditions concerning the original owner and the beneficiaries, which must be accurately specified.

The user is strongly advised to review the flowchart IRAs: inherited IRA Options.

The options allow for a spouse, non-spouse, or no designated beneficiary as of September 30th of the year following the original owner’s death. If the beneficiary is a spouse, there are further selections as to whether the spouse rolled over the IRA, the spouse is still alive, the spouse has deceased after inheriting the IRA.

The module does not handle successor beneficiaries, but there is some helpful guidance regarding that further down in these instructions.
The module does not currently use of the Uniform table for RMD calculation that may be available by election for some spouses in 2024 or are required by default for some 2025 RMD’s. See Section 327 of the Secure Act and the new 7-19-24 Proposed Regulations.
This module does not consider any RMD that might be required for the year of death. It will only begin calculations starting the year after death.

Non-sole beneficiary spouses

This module does not support non-sole beneficiary spouses, even though they are classified as eligible designated beneficiaries. The computation for most Eligible Designated beneficiaries is based on their age the year after the death of IRA owner, minus 1 for each subsequent year.

For a non-sole spouse however, the ratio is recalculated based on the spouse’s age each year. This small difference in calculation method sometimes results in the same RMD amount, but if checkbox 2 is utilized for a spouse, the displayed results may show a somewhat larger RMD than is actually required.

Non-spouse designated beneficiaries

For deaths after 12/31/19 the program assumes that the designated beneficiary is also an eligible designated beneficiary, which includes:

  • a minor child of the original IRA owner
    Children of the IRA owner are generally “Eligible” beneficiaries if under age 21 at the time of death. Once they turn the age of 21, their RMD’s continue, but they are also subject to the 10-Year Rule, which means that they must completely distribute the account by Dec 31st of the year in which they turn 31.
    The program will simply show the child's age during the year of death and does not give guidance in determining if your child beneficiary turned 21 before or after the IRA owner’s death or when the adult child turns 31. The user must keep track of the year and make sure the account is fully distributed by Dec 31st of the year the child turns age 31.
  • a disabled or chronically ill individual of any age
  • a beneficiary not more than 10 years younger than the original IRA owner (at the time of their death)
  • a spouse who is not the sole beneficiary
    This module does not support spouses who are not the sole beneficiary.
    See IRS instructions for more specific details about eligible beneficiaries, such as what defines a beneficiary as disabled.
    The module result will give you the applicable divisor/RMD for such an eligible beneficiary.
    Designated Beneficiary: Non-eligible. If the designated beneficiary is not an eligible beneficiary as defined above, and the original IRA owner had reached their Required Beginning Date (RBD) for RMD’s by the date of death, then RMD’s are also required of the beneficiary beginning the year after death and the module result will display the applicable RMD, which is the same calculation as for Eligible Beneficiaries, except the account must be fully distributed by the end of the 10th year.
  • Noneligible designated beneficiaries are subject to the general 10-year rule, which states that the entire account must be distributed by December 31st of the year containing the 10th anniversary of the owner’s death. 
    The RMD displayed by the program is only appropriate for eligible designated beneficiaries or noneligible beneficiaries where the IRA owner reached their RBD by the date of death.
    If the IRA Owner had not reached their RBD by date of death, no RMD’s are due until the 10th year, at which time the RMD is 100% of the remaining balance.  
    Anyone under the 10-year rule must completely empty the account by the end of the 10th year that contains the 10th annivesary of the owner's death  No extension of the 10 years is provided under any of the IRS waivers.
Review IRS Notice 2024-35, and Notices 2022-53 and 2023-54 regarding the subject of missed RMD’s on Inherited IRA’s for years 2021-2024. 
Note that this module computes RMDs without regard to waiver years.

5-year rule and 10-year rule

The module will not alert you to when your beneficiary reaches the end of their 5 or 10-year window. Keep close track of the year and make sure full disbursement of the account is made by Dec 31st of the appropriate year.

In the year after your 5-year window closes, the program may alert you to being late on your final disbursement—without regard to the IRS’ exception of year 2020. CFS module’s rarely incorporate waiver years into their results.

Age for Required Minimum Distributions

  • Born before 07/01/1949: Age 70 1/2
  • Born before 01/01/1951: Age 72 (SECURE ACT, effective 1/1/2020)
  • Born before 01/01/1960: Age 73 (SECURE ACT 2.0, effective 1/1/2023)
  • Born after 12/31/1959: Age 75 (SECURE ACT 2.0, effective 1/1/2023)
For distribution calendar years starting in 2022, the divisor tables have been updated in Pub 590-B. See also the Federal Register dated 11/12/2020, pages 72472-72503.

Successor Beneficiary; Beneficiary of a Designated Beneficiary

Scenarios with deaths prior to 2002 are not considered.

If both the Original IRA Owner and original Designated beneficiary died before 1/1/2020

RMD’s should always be calculated under the OLD/Pre-Secure Acts rules (in the case of a multi-beneficiary “See-through” trust, where accounts were not timely separated, this would typically be based on the death date of the Oldest beneficiary). 

See the IRAs: Inherited IRA options Section 401(a)(9) (1/1/02 to 12/31/19) flowchart for the applicable rules in these cases. 
This RMD module cannot be depended on to calculate the correct RMD for a successor beneficiary under the Pre-Secure Act Rules.

If the Original IRA Owner died before 2020 but their original Designated beneficiary died 1/1/2020 or later

These instructions do not cover a scenario which includes a multi-beneficiary account where accounts were not timely separated. Specialized rules apply in such cases, even effecting co-beneficiaries of the oldest original designated beneficiary (see IRS instructions).

SECURE Act and SECURE Act 2.0 Rules and their Final regulations apply as follows (presuming the original Designated beneficiary was not under the 5-year rule):

The deceased original Designated beneficiary is treated as if they were an Eligible Beneficiary, whose Successor Beneficiary(s) then:

  • Continues the original Designated beneficiary’s RMD’s, and
  • Is subject to the 10-year rule which demands that the entire account be emptied by the end of the calendar year that contains the 10th Anniversary of the original Designated beneficiary’s death.  
This RMD module cannot be depended on to calculate the correct RMD for a successor beneficiary, but the information can be entered for the original IRA owner and their original Designated Beneficiary, to determine the RMD the original Designated Beneficiary was taking, which needs to be continued by the Successor beneficiary (who is now also under the 10-year rule). 
Only one 10-year window applies and hence, should the successor beneficiary die the next successor continues the RMD's but only has the remainder of the 10 year window to empty the account.

SECURE Act Change effective 1/1/2020

Nonspouse beneficiaries must distribute the account within 10 years of the death of the original owner. There are exceptions that allow the old RMD rules to still apply. The exceptions are if the beneficiary:

  • is chronically ill or disabled, or
  • is not more than 10 years younger than the original owner, or
  • is a minor child of the original account owner. In this case in addition to their RMD’s, once they reach the age of 21 they are also subject to the 10-year rule, and the account balance must be fully distributed by December 31st of the year they turn 31. This exception does not include grandchildren or others that are not the minor child of the IRA owner. See IRS instructions regarding foster children and other specific rules.

The calculations in this module are dependent on a number of conditions concerning the original owner and the beneficiaries, which must be accurately specified.

If there are multiple beneficiaries and the account has not been timely split into separate accounts, and if IRS rules allow you to treat the account distribution according to Eligible Beneficiary rules, then the birth date of the oldest beneficiary must be entered.
Make sure you understand the new IRS rules concerning multi-beneficiaries when using module, and double-check that it's giving you the expected results.

Required Beginning Date (RBD)

Most results are dependent on whether the IRA owner died before or after reaching the RBD. The RBD is April 1 following the year in which the owner reaches the required age. The RBD is the date by which the owner's first distribution must be taken.

Special Circumstances

Beneficiary of a Beneficiary: This module doesn't cover these situations completely. See the flowchart IRAs: inherited IRA options (after 12/31/19)(SECURE Act and SECURE Act 2.0).

IRAs Inherited Under the Pre-2002 Rules

IRAs inherited before 2002 were permitted to change to more favorable distributions under the rules of April 2002. There were two steps to go through to change the distribution schedule under the new rules:

  • The designated beneficiary must be re-determined as of September 30
    of the year following the year of death.
  • The life expectancy of the designated beneficiary must be reconstructed by going back to the year of death and looking up his/her age and life expectancy from the single life table, then reduce the divisor by one for each subsequent year.
This module will automatically calculate the RMD under the new rules for deaths occurring before 2002 and distributions occurring in 2002 or later.

See also:

  • ​IRA Minimum Distribution​
  • ​IRA Minimum Distribution - Multiple Account Worksheet
The CARES Act temporarily waived the requirement to take RMDs for calendar year 2020, including required distribution under the 5-Year Rule".  The results of this module will not reflect these 2020 exceptions.
The Worker, Retiree, and Employer Recovery Act of 2008 temporarily waived the requirement to take required minimum distributions (RMDs) for calendar year 2009.

How did we do?

Form 656, Offer in Compromise

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