How to Calculate Successor Inherited IRA RMD
Understanding how to calculate the required minimum distribution (RMD) for a successor inherited IRA is crucial for individuals who have inherited an IRA from a deceased account holder. The RMD is the minimum amount of money that must be withdrawn from an IRA each year after the account holder reaches a certain age. Calculating the RMD for a successor inherited IRA can be slightly different from calculating it for a traditional IRA, as it involves additional factors such as the deceased account holder’s age and the relationship between the successor and the deceased. In this article, we will guide you through the process of calculating the successor inherited IRA RMD.
Step 1: Determine the Deceased Account Holder’s Age
The first step in calculating the successor inherited IRA RMD is to determine the deceased account holder’s age at the end of the year in which they passed away. This is important because the RMD percentage is based on the deceased account holder’s age. You can find this information on the IRA account statement or by contacting the IRA administrator.
Step 2: Determine the Successor’s Age
Next, you need to determine the age of the successor at the end of the year in which the deceased account holder passed away. This is crucial because the RMD percentage is also based on the successor’s age. If the successor is younger than the deceased account holder, the RMD percentage will be lower.
Step 3: Calculate the RMD Percentage
Once you have the ages of both the deceased account holder and the successor, you can calculate the RMD percentage. The RMD percentage is determined by dividing the deceased account holder’s age by the successor’s age and then multiplying the result by 0.5. For example, if the deceased account holder was 70 years old and the successor was 40 years old, the RMD percentage would be (70/40) 0.5 = 1.75.
Step 4: Determine the IRA Balance
The next step is to determine the IRA balance at the end of the year before the deceased account holder passed away. This information can be found on the IRA account statement or by contacting the IRA administrator.
Step 5: Calculate the RMD
Finally, you can calculate the RMD by multiplying the IRA balance by the RMD percentage. For example, if the IRA balance was $100,000 and the RMD percentage was 1.75, the RMD would be $100,000 1.75 = $175,000.
Conclusion
Calculating the successor inherited IRA RMD involves several steps, including determining the ages of both the deceased account holder and the successor, calculating the RMD percentage, and determining the IRA balance. By following these steps, you can ensure that you are accurately calculating the RMD for the inherited IRA. It is important to note that tax laws and regulations may change, so it is always a good idea to consult with a tax professional or financial advisor for the most up-to-date information.
