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July 19, 2023 at 6:08 pm #85738David
I inherited an IRA from my father who passed away in December of 2021, at the age of 87. He had already taken his RMD for that year.
I’m 58 years old, I haven’t taken any withdrawals from it in 2022. My questions are:
- Is the RMD based on my life expectancy or can I withdraw any amount?
- I have heard that I can wait until year 10 to take everything out, or do I need to take out a certain percentage every year?
I asked my accountant and he wasn’t sure. (I probably need a new accountant).
Thanks in advance for the info.July 19, 2023 at 6:09 pm #85739Mike
I don’t think there has been a final ruling on the 10 year option. We are in a similar position as well.
Going to wait until the decision is finalized. We are 3 years into the 10 year period, but it’s not enough money to make a potential penalty any real concern.July 19, 2023 at 6:10 pm #85740Tavan
In the same situation, with my Mom passing last year. My understanding is some of the rules haven’t been decided upon yet. There will likely be RMDs, but when & the calculation for amounts haven’t been delineated.
In my situation, I took advice, divided the amount by 10 and took my first withdrawal this year while tax ranges are favorable. If you believe you’ll have lower income in the near future (retiring, etc) then you could wait until the guidelines are specified.July 19, 2023 at 6:10 pm #85741Michael
Here is the latest from the IRS. You are required to take an amount out per year over a 10 year period, whether that is an IRA or Roth based on when you inherited it. The IRS waived the withdrawal requirement for 2022 because of confusing verbiage coming from the government, to include the IRS. They have now waived the 2023 withdrawal requirement, but you will be required to withdraw an RMD in 2024. See the link below.
By the way, you can pull as much out of this account as you like without penalty any time you like. Just taxes will be owed if it is Traditional. A smart strategy is to use this as an emergency account, keeping cash or short term bonds here for short term needs while sheltering the income paid out on a yearly basis, ideally, pulling money only when in the 12% federal bracket or less.