If you were required to take an RMD, either because you’re of the appropriate age or you’ve inherited a retirement account, you can skip it in 2020. “The whole year is a grace period,” said Ed Slott, CPA and founder of Ed Slott & Co. in Rockville Centre, New York. “It’s just waived for this year.”
Are RMDs required for inherited IRAs?
The IRS requires that most owners of IRAs withdraw part of their tax-deferred savings each year, starting at age 72 (age 70½ if you attained age 70½ before 2020) or after inheriting any IRA account for certain individual beneficiaries. That withdrawal is known as a required minimum distribution (RMD).
What are the RMD rules for an inherited IRA?
RMD rules for inherited IRAs. The IRA you’re inheriting comes with a few responsibilities. Here’s a rundown of what you need to know. The IRS requires that most owners of IRAs withdraw part of their tax-deferred savings each year, starting at age 70½ (or after inheriting any IRA account).
What happens if I withdraw less than my RMD?
If you withdraw less than your RMD, you may owe a 50% penalty tax on the difference. RMDs are designed to ensure that investments in IRAs don’t grow tax-deferred forever and this carries over to the beneficiary of the IRA.
When does a spousal beneficiary have to take a RMD?
The spousal beneficiary should not enroll in our RMD Service until the year he or she intends to begin taking RMDs. If the owner’s spouse chooses to assume the IRA, he or she must begin taking RMDs by the later of December 31 of the year after the owner’s death or April 1 of the year after the spouse reaches RMD age.
When do beneficiaries of inherited IRAs have to be distributed?
Any individual beneficiary may elect to distribute the inherited IRA assets over the five years following the owner’s death. The distribution must be completed by the end of the year containing the fifth anniversary of the owner’s death.
