30 Apr Do I have to take a distribution from my inherited IRA?
Q. I understand that in 2020, you do not have to take Required Minimum Distributions. Does that also apply to Inherited IRAs?
A. You’re correct that holders of IRAs and other retirement accounts who normally have to take Required Minimum Distributions (RMDs) can skip the withdrawal in 2020.
Normally, those who are 72 and older (it was 70 1/2 before the SECURE Act) must take mandatory distributions from IRAs, 401(k)s and other retirement plans by Dec. 31, otherwise they’d face a hefty penalty worth 50% of what was supposed to be withdrawn.
The idea behind the change is that it will stop people from being forced to sell losing investments from the coronavirus selloff, and it will also help their tax bills.
Those who normally take required distributions from inherited IRAs can also skip the withdrawal.
But there is one difference in the rules for both kinds of accounts.
From IRAs and 401(k), if you’ve already taken your RMD, you can actually put it back or roll it into a new IRA within 60 days of the withdrawal without facing taxes and penalties.
Those with inherited IRAs, though, cannot undo any distribution.
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This story was originally published on April 30, 2020.
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