Inherited IRA RMDs Post-SECURE Act

Originally Published on 5/23/24by Prof. Robert Bloink and Prof. William H. Byrnes

Post-SECURE Act, many individuals who have inherited retirement accounts have significant questions on how their ongoing required minimum distributions (RMDs) must now be calculated. While most clients know that the life expectancy distribution option (or “stretch” IRA) has been unavailable for most account beneficiaries since the SECURE Act was signed into law, the life expectancy tables remain important for individuals who are calculating their annual RMDs. The rules can become particularly confusing in situations where the account beneficiary has elected to skip RMDs in any situation where the IRS has offered relief from penalties for missed RMDs. Because the penalty for missed RMDs is significant, it’s important that the taxpayer calculates their RMDs correctly using the correct life expectancy factor for the year in question.

When Do the Life Expectancy Tables Apply?

As a general matter, an inherited account beneficiary’s RMD is calculated by dividing the account balance as of December 31 of the previous year by the proper life expectancy factor. These life expectancy factors are based on age and are found in the IRS’ Single Life Expectancy Table, which was updated in 2022 based on new data on mortality.