Inherited IRA RMD Calculator
Use this calculator to estimate your Required Minimum Distribution (RMD) from an inherited IRA. The rules for inherited IRAs can be complex, depending on the date of the original owner's death and your relationship to them. This tool helps you understand your potential annual distribution.
Estimated RMD:
Understanding Required Minimum Distributions (RMDs) for Inherited IRAs
When you inherit an Individual Retirement Account (IRA), you become subject to specific rules regarding how and when you must withdraw money from it. These withdrawals are known as Required Minimum Distributions (RMDs). The rules for inherited IRAs are distinct from those for your own IRA and can vary significantly based on several factors, primarily the date of the original IRA owner's death and your relationship to them.
Why Are Inherited IRA RMDs Important?
Failing to take your RMDs on time can result in a hefty penalty: a 25% excise tax on the amount you should have withdrawn but didn't. This penalty can be reduced to 10% if the RMD is taken by the end of the second year following the year the RMD was due. Understanding and adhering to these rules is crucial for avoiding unnecessary taxes and penalties.
Key Factors Affecting Inherited IRA RMDs
The calculation and timing of your inherited IRA RMDs depend on:
- Date of the Original IRA Owner's Death: The SECURE Act, enacted on January 1, 2020, significantly changed the rules for beneficiaries of IRAs where the owner died on or after this date.
- Your Relationship to the Deceased: Spouses, minor children, disabled individuals, chronically ill individuals, and individuals not more than 10 years younger than the deceased have different rules than other non-spouse beneficiaries.
- Whether the Deceased Owner Had Started Taking RMDs: This impacts the 10-year rule for certain non-spouse beneficiaries.
Types of Beneficiaries and Their RMD Rules
1. Spouse Beneficiary
If you are the spouse of the deceased IRA owner, you generally have the most flexibility:
- Treat as Your Own IRA: You can roll over the inherited IRA into your own IRA or treat the inherited IRA as your own. If you choose this option, RMDs will begin when you reach your own RMD age (currently 73), based on your life expectancy. This is often the most advantageous option.
- Treat as an Inherited IRA: You can keep the IRA as an inherited IRA. In this case, RMDs generally begin by December 31 of the year following the year of the original owner's death. Your RMDs are calculated using your own life expectancy, based on the IRS Single Life Expectancy Table.
2. Eligible Designated Beneficiary (EDB)
For deaths on or after January 1, 2020, certain non-spouse beneficiaries are considered "Eligible Designated Beneficiaries" and are exempt from the 10-year rule. They can still stretch RMDs over their life expectancy. EDBs include:
- The surviving spouse (as mentioned above).
- A minor child of the deceased (until they reach the age of majority, typically 21, at which point the 10-year rule applies).
- A disabled individual.
- A chronically ill individual.
- Any other individual who is not more than 10 years younger than the deceased IRA owner.
For EDBs, RMDs generally begin by December 31 of the year following the year of the original owner's death, calculated using the beneficiary's life expectancy from the IRS Single Life Expectancy Table.
3. Non-Spouse Designated Beneficiary (Deceased Died BEFORE 2020)
If the original IRA owner died before January 1, 2020, and you are a non-spouse designated beneficiary (meaning an individual, not an estate or charity), you can generally stretch RMDs over your own life expectancy. RMDs begin by December 31 of the year following the year of the original owner's death, using the IRS Single Life Expectancy Table.
4. Non-Spouse Designated Beneficiary (Deceased Died AFTER 2019 – The 10-Year Rule)
This is the most common scenario for non-spouse beneficiaries for deaths occurring on or after January 1, 2020, who are not EDBs. The "10-year rule" applies:
- If the deceased IRA owner was NOT taking RMDs: You are generally NOT required to take annual RMDs for the first nine years. However, the entire inherited IRA balance must be distributed by December 31 of the tenth year following the year of the original owner's death.
- If the deceased IRA owner WAS taking RMDs: You ARE required to take annual RMDs for years 1 through 9, calculated using your own life expectancy from the IRS Single Life Expectancy Table. The remaining balance must then be distributed by December 31 of the tenth year following the year of the original owner's death.
This distinction is critical. Our calculator helps you determine the annual RMD if you fall into the latter category.
5. Non-Designated Beneficiary (e.g., Estate, Charity)
If the beneficiary is an estate, charity, or certain trusts, the rules are different and generally less flexible. If the owner died before RMDs began, the 5-year rule typically applies (entire account distributed within 5 years). If the owner died after RMDs began, the remaining RMDs are based on the deceased owner's remaining life expectancy.
How to Calculate Your Annual RMD (Life Expectancy Method)
For beneficiaries using the life expectancy method (Spouse treating as inherited, EDBs, or Non-Spouse pre-2020 death, or Non-Spouse post-2020 where deceased was taking RMDs), the formula is:
RMD = Inherited IRA Balance (as of Dec 31 of prior year) / Beneficiary's Life Expectancy Factor
The "Beneficiary's Life Expectancy Factor" is found in the IRS Single Life Expectancy Table (Table I in IRS Publication 590-B) for your age as of December 31 of the year for which the RMD is being calculated. This factor decreases each year as you get older, resulting in a larger RMD.
Example Scenarios:
Scenario 1: Non-Spouse Designated Beneficiary (Deceased died BEFORE 2020)
- Inherited IRA Balance (Dec 31, prior year): $150,000
- Beneficiary's Age (Dec 31, RMD year): 45
- Year of Original IRA Owner's Death: 2018
- Life Expectancy Factor for age 45 (from IRS Table I): 38.7
- Estimated RMD: $150,000 / 38.7 = $3,875.97
Scenario 2: Eligible Designated Beneficiary (EDB) – Minor Child
- Inherited IRA Balance (Dec 31, prior year): $250,000
- Beneficiary's Age (Dec 31, RMD year): 10
- Year of Original IRA Owner's Death: 2022
- Life Expectancy Factor for age 10 (from IRS Table I): 73.5
- Estimated RMD: $250,000 / 73.5 = $3,401.36
- Note: This RMD would apply until the child reaches the age of majority, then the 10-year rule would begin.
Scenario 3: Non-Spouse Designated Beneficiary (Deceased died AFTER 2019, and WAS taking RMDs)
- Inherited IRA Balance (Dec 31, prior year): $100,000
- Beneficiary's Age (Dec 31, RMD year): 60
- Year of Original IRA Owner's Death: 2021
- Life Expectancy Factor for age 60 (from IRS Table I): 24.6
- Estimated RMD: $100,000 / 24.6 = $4,065.04
- Note: This annual RMD would be required for years 1-9, with the remaining balance distributed by the end of year 10.
Important Considerations
- Always consult IRS Publication 590-B and a qualified tax advisor for personalized advice, as rules can be complex and change.
- The RMD must be taken by December 31 of the year it is due.
- If you have multiple inherited IRAs, you must calculate the RMD for each separately, but you can generally aggregate and take the total RMD from any one or more of them (if they are from the same deceased owner).