Inherited IRA RMD Calculator

Calculate Required Minimum Distributions for an inherited IRA under the SECURE Act rules. This calculator helps beneficiaries understand their withdrawal requirements, plan optimal distribution strategies, and estimate tax impacts over the 10-year distribution period.

Understanding Inherited IRA Rules: A Complete Guide

Inheriting an IRA brings both an opportunity and significant tax planning responsibilities. The SECURE Act of 2019 dramatically changed the rules for inherited IRAs, eliminating the "stretch IRA" for most beneficiaries. This guide explains the current rules, who they apply to, and how to optimize your inherited IRA distributions.

The SECURE Act 10-Year Rule

For most non-spouse beneficiaries who inherit IRAs from owners who died after December 31, 2019, the entire account must be distributed within 10 years of the owner's death:

For example, if the original owner died in 2024, the account must be fully distributed by December 31, 2034.

Who Is Subject to the 10-Year Rule?

Non-Eligible Designated Beneficiaries must follow the 10-year rule. This includes:

• Adult children of the deceased
• Grandchildren
• Siblings
• Friends
• Most trusts

Eligible Designated Beneficiaries (EDBs)

Five categories of beneficiaries can still use the stretch IRA over their life expectancy:

The Annual RMD Controversy

A major confusion arose after the SECURE Act: Must non-EDBs take annual RMDs during the 10 years, or can they wait until year 10?

Current IRS Guidance (2024):

• If the original owner died before their Required Beginning Date (RBD, currently age 73): No annual RMDs required—just empty by year 10
• If the original owner died on or after their RBD: Annual RMDs required based on beneficiary's life expectancy, plus must empty by year 10

Note: The IRS has waived penalties for missed 2021-2024 RMDs while rules are clarified. Stay updated on final regulations.

Life Expectancy Calculation for RMDs

When annual RMDs apply, they're calculated using the IRS Single Life Expectancy Table:

The life expectancy factor is determined in year 1 and reduced by 1 each subsequent year.

Sample Life Expectancy Factors

Distribution Strategy Comparison

How you spread distributions over 10 years significantly impacts your total tax bill:

Strategy 1: Even Distributions

Withdraw roughly equal amounts each year. Benefits:

• Predictable income and tax planning
• Avoids large bracket jumps
• Balanced approach

Strategy 2: Maximum Deferral

Take nothing until year 10, then withdraw entire balance. Benefits:

• Maximum tax-deferred growth
• Works well for Roth inherited IRAs (no RMDs, tax-free)

Risks:

• Huge tax hit in year 10
• May push you into much higher brackets
• Doesn't work if annual RMDs required

Strategy 3: Front-Load

Take larger distributions early. Benefits:

• If expecting higher income later (promotions, business growth)
• Locking in current tax rates if expecting increases
• Reduces future RMD requirements

Strategy 4: Back-Load

Take minimum early, larger amounts later. Benefits:

• More tax-deferred growth
• If expecting lower income later (retirement)
• Useful if current income is high

Tax Bracket Management

The optimal strategy often involves "filling brackets" each year:

Special Rules for Inherited Roth IRAs

Roth inherited IRAs have unique advantages:

• No RMDs during 10 years: You can let it grow tax-free
• Tax-free distributions: All withdrawals are tax-free (assuming 5-year rule is met)
• Still must empty in 10 years: The 10-year rule applies regardless

Optimal Roth Strategy: Defer all withdrawals to year 10 for maximum tax-free growth, unless you need the funds.

Successor Beneficiary Rules

If a beneficiary dies before emptying an inherited IRA, the successor beneficiary's rules depend on timing:

• Successor inherits the remaining 10-year window of the original beneficiary
• Does NOT get a fresh 10 years
• May need to accelerate distributions

Trust Beneficiaries

When a trust is named as beneficiary, the rules get complex:

See-Through Trusts

If certain requirements are met, the trust can "look through" to the individual beneficiaries:

• Trust must be valid under state law
• Trust must be irrevocable or become so at death
• Beneficiaries must be identifiable
• Trust documentation provided to custodian

Conduit vs. Accumulation Trusts

• Conduit: Must distribute RMDs directly to beneficiaries annually
• Accumulation: Can retain distributions; highest marginal rates apply

State Tax Considerations

Some states offer favorable treatment for retirement distributions:

• No state income tax: AK, FL, NV, SD, TN, TX, WA, WY
• Retirement income exclusions: Many states exclude some IRA distributions
• Consider timing: Take distributions when living in lower-tax state

Impact on Other Financial Situations

Medicare Premiums (IRMAA)

Large distributions can trigger Income-Related Monthly Adjustment Amounts, increasing Medicare Part B and D premiums.

Social Security Taxation

Inherited IRA distributions can cause more of your Social Security benefits to become taxable.

ACA Subsidies

If on marketplace insurance, distributions increase MAGI and can reduce or eliminate premium subsidies.

Worked Example

Situation: Sarah, age 50, inherits a $400,000 Traditional IRA from her father who died in 2024 at age 78 (after his RBD).

Rules that apply:

• 10-year rule (non-EDB adult child)
• Annual RMDs required (father died after RBD)
• Must empty by December 31, 2034

Year 1 RMD calculation:

• Sarah's age in year after death: 51
• Life expectancy factor: 35.2
• RMD: $400,000 ÷ 35.2 = $11,364 minimum

Sarah could take more than the RMD and might choose to take $45,000/year to stay in the 22% bracket and empty the account over ~10 years with growth.

Commonly Asked Questions

Can I roll an inherited IRA into my own IRA?

Only surviving spouses can do this. All other beneficiaries must keep it as an inherited IRA in the deceased's name "for the benefit of" the beneficiary.

What if I miss an RMD?

The penalty is 25% of the amount not taken (reduced from 50% by SECURE 2.0). File Form 5329 and request a waiver for reasonable cause.

Can I do a Roth conversion on an inherited IRA?

No. Only the original owner could do Roth conversions. Beneficiaries cannot convert inherited Traditional IRAs to Roth.

What happens if I don't empty the account in 10 years?

The remaining balance is subject to the 25% excess accumulation penalty.

Do qualified charitable distributions (QCDs) work for inherited IRAs?

Yes, if you're 70½ or older, you can do QCDs from an inherited IRA (up to $105,000 in 2024).

Planning Strategies

1. Calculate your bracket space each year and fill it strategically
2. Consider future income changes when planning distributions
3. Bunch deductions in years with higher distributions
4. Use QCDs if charitably inclined and age-eligible
5. Coordinate with other income like Social Security, pensions, Roth conversions
6. Model scenarios with different distribution patterns

Key Takeaways

• Most non-spouse beneficiaries must empty inherited IRAs within 10 years
• Annual RMDs may or may not be required depending on when the owner died
• Distribution strategy significantly impacts total taxes paid
• Inherited Roth IRAs are most valuable—let them grow tax-free
• Consider bracket management, not just minimizing withdrawals
• Plan ahead—the 10 years go faster than expected

The inherited IRA rules are complex and have been evolving. This calculator provides a starting point for planning, but consult a tax professional for personalized advice on your specific situation.