How do I take money from this inherited IRA?

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Q. When my brother died, I inherited a $60,000 IRA. I know I will have to take out Required Minimum Distributions (RMDs) every year. I’m 64. Do I have to take an RMD, and if I do, by when and how much?
— Beneficiary

A. Distributions from inherited IRAs can be confusing.

When in doubt, go to the IRS’ website. 

The rules covering inherited IRAs depend on whether the IRA was left to you by your spouse or a non-spouse, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

“Since you inherited the IRA from your brother, the non-spouse rules apply,” Kiely said.

The next question you have to ask is whether your brother started taking RMDs from the account, and if he did, did he take the one for 2018 before his death?

Kiely said you are only required to take one distribution per year from an inherited IRA.

“If your brother wasn’t required to take RMDs in 2018, then you are not required to do so,” he said. “If he was required to take an RMD and did not do so before he died, then you have to take it.”

So what do you have to do going forward?

Kiely said you have to start taking distributions from the inherited IRA by Dec. 31 in the year after your brother died.

He said you can calculate the distribution using the IRS’ Table #1, “Single Life Expectancy.”

The age you use is the younger of your age or the deceased owner’s age in the year of death, he said.

”Each year you divide the Dec. 31 balance of the prior year by the life expectancy factor,” he said. “The factor is a divisor; it is not a decimal. You take one RMD each year going forward.”

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