Ask the Expert: I inherited an IRA from my mom. What next?
My mom died in April of 2020 at 90. I inherited half her IRA. My accountant said I had to empty it in 10 years, but nothing about required minimum distributions (RMDs), which I haven't taken. Was I supposed to be taking out RMDs? Was my accountant wrong?
Relax. The new RMD rules for inherited IRAs were so widely misunderstood that the Internal Revenue Service has said it won't penalize people in your situation for failing to take 2021 and 2022 RMDs. Next year, take a 2023 RMD based on your life expectancy and don't worry about those you missed in 2021 and 2022.
Your accountant's advice was based on his profession’s widely shared interpretation of a new law’s rules for people who inherit IRAs in 2020 or later — a law that became effective in January 2020. Tax preparers didn’t think beneficiaries who were subject to the 10-year rule also had to take RMDs.
In February 2022, the IRS announced a different interpretation of the law. It said many beneficiaries must take RMDs in addition to emptying inherited accounts by Dec. 31 of the 10th year after the original owner's death.
Annual RMDs are required when the original owner was subject to RMDs at the time of death, unless the IRA beneficiary qualifies for an exception. The exceptions: RMDs aren't required of surviving spouses; disabled or chronically ill beneficiaries; minor children of the original account owner; or beneficiaries not more than 10 years younger than the account owner (for example, siblings).
You must take RMDs because you don't qualify for an exception, and your mother was subject to RMDs. (IRA owners are subject to RMDs after April 1 of the year after they turn 72.)
The bottom line
The rules for inherited IRAs depend partly on the beneficiaries’ relationship with the original owner.
