I have tried to understand the IRS explanation of how inherited IRAs must be distributed. My take on the rules suggests that the yearly required minimum distribution for young beneficiaries is based on the age of the beneficiary, not the IRA owner who died. Note that if the IRA owner had not taken their RMD for the year, the beneficiary will have to take the amount the IRA owner would have for the year in which the IRA owner died. In subsequent years I understood the beneficiary's RMD would be calculated using the beneficiary's age with the requirement that the account be emptied by December 31st of the 10th year after the IRA owner's death. Distribution rules are more generous if the beneficiary is close in age to the IRA owner who died. Different provisions apply when the IRA beneficiary is under 18 years of age, and there some complicated rules that pertain to IRA beneficiaries who are not actual people. There are also some trusts that are fashioned in a way to take advantage of favorable IRA distribution schemes. As I am not an accountant, lawyer, or IRS enrolled agent, I could be mistaken. I heartily agree with the advice to contact an expert when setting up your estate plan and when inheriting an IRA. I have one further gripe about the Morningstar article. The article assumes that the spousal IRA beneficiary is female. I am quite sure a male who inherits an IRA from his spouse has the same decisions to make.
There is one more wrinkle to consider. Perhaps you are purchasing Affordable Health Care insurance because you are not yet eligible for Medicare. If your income is low enough, you qualify for premium subsidies. Withdrawals you take from your Roth IRA do not count toward your income when determining eligibility for premium subsidies.
Comments
I have tried to understand the IRS explanation of how inherited IRAs must be distributed. My take on the rules suggests that the yearly required minimum distribution for young beneficiaries is based on the age of the beneficiary, not the IRA owner who died. Note that if the IRA owner had not taken their RMD for the year, the beneficiary will have to take the amount the IRA owner would have for the year in which the IRA owner died. In subsequent years I understood the beneficiary's RMD would be calculated using the beneficiary's age with the requirement that the account be emptied by December 31st of the 10th year after the IRA owner's death. Distribution rules are more generous if the beneficiary is close in age to the IRA owner who died. Different provisions apply when the IRA beneficiary is under 18 years of age, and there some complicated rules that pertain to IRA beneficiaries who are not actual people. There are also some trusts that are fashioned in a way to take advantage of favorable IRA distribution schemes. As I am not an accountant, lawyer, or IRS enrolled agent, I could be mistaken. I heartily agree with the advice to contact an expert when setting up your estate plan and when inheriting an IRA. I have one further gripe about the Morningstar article. The article assumes that the spousal IRA beneficiary is female. I am quite sure a male who inherits an IRA from his spouse has the same decisions to make.
Post: The IRA Decision That Affects Your Kids
Link to comment from April 18, 2026
There is one more wrinkle to consider. Perhaps you are purchasing Affordable Health Care insurance because you are not yet eligible for Medicare. If your income is low enough, you qualify for premium subsidies. Withdrawals you take from your Roth IRA do not count toward your income when determining eligibility for premium subsidies.
Post: Self-Inflicted
Link to comment from June 29, 2022