Chapter 8 - RMDs for Inherited Retirement Accounts

Spouse Beneficiary

If you are inheriting a retirement account and you are the spouse of the deceased, click here to learn more.

Non-Spouse Beneficiary

If you are inheriting a retirement account and you are not the spouse of the deceased, click here to learn more.

Inheriting a Retirement Account

Inheriting a retirement account is a blessing, but also a challenge. A person who may be grieving, must now handle the details of inheriting one or more accounts, all while being mindful of the deadlines for Required Minimum Distributions. Information about this topic can also be found by visiting the IRS website. 

Decisions to Make for RMDs

When you inherit an account, there are certain steps that must be taken. You will have to determine if you want the funds received immediately as personal income, or if you desire to maintain a tax-deferred status for a longer period of time. If you are a non-spouse and you want to continue growing the funds tax deferred, you will need to open an Inherited / Beneficiary IRA. However, different rules will apply if you are inheriting the account as a spouse.

Be Mindful of the RMD Deadlines

When inheriting a retirement account, specific timelines and deadlines must be met. It will be important to determine if the previous owner had been taking timely Required Minimum Distributions (RMD) from the account. An RMD is the minimum amount of funds that the IRS requires to be withdrawn from the account. Just like the previous owner, you will be required to take RMDs. Determining the correct RMD withdrawals can be a complicated calculation, and has strict deadlines.

Follow the Custodian’s Guidelines

The custodian of a retirement account is the company that manages the account. Each custodian has a formal process for how to transfer the account. They may need to see the death certificate of the person who passed away. There may be a certain amount of time required to pass before the funds can be transferred, or additional unique steps may need to be taken. These details will be important to learn for each account.

Contact Us to Help You

Following the necessary steps and deadlines is very important. If not done correctly it could result in problems with the IRS. To learn more, visit the IRS website. As advisors, we help individuals and families navigate the details necessary to inherit an account. Please contact us to help you with the details associated with RMDs from an Inherited account.

Contact us For Help with RMDs

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