Question

Inherited IRA and 10 Year Distribution

Forum|Forum|4 years ago
January 20, 2022
2 replies
0 views

I inherited (was one of 4 people) an IRA in late 2020 and in early 2021 began taking monthly distributions (taxes withheld) to satisfy the 10 year rule (it should be completed in 5-6 years. Although the person I inherited from was subject to an RMD, I am not and will not be for a number of years. TurboTax asks if some or all of this distribution is an RMD. My guess is "no" as I am not subject to RMDs myself. The account will be liquidated well within the 10 year allotment.

M

MinhT1

Your obligation to fully distribute the account within 10 years following the death of the original owner is a Required Minimum Distribution.

Therefore, in TurboTax, you should indicate that the distribution is a RMD.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

O

Opus 17

Employee

The reason for the question is that a required distribution can't be rolled over into a new account and can't be used for the basis of a new contribution. You have to take out the money and pay the tax. So in this case, answer yes it was a required distribution. (This will not change your tax, but will give Turbotax information needed to recognize if you are doing something else that is not allowed, like trying to do a rollover into your own regular IRA.)

fanfare

Employee

Your distribution from a recently inherited IRA ( subject to the new 10-year rule ) is not an RMD.

The only way a custodian would rollover an inherited IRA into your own IRA is if you are a spouse and decided to treat it as your own, in which case it is not a taxable event.

The only required distribution is the final one at the end of the tenth year.