Beneficiary IRAs and Required Minimum Distributions

Question

If you receive a (non-spousal) Beneficiary-traditional IRA as a beneficiary due to death, is there a way to avoid taking a Required Minimum Distribution until your own retirement age? Or are you always required to take an RMD regardless of your current age?

Answer 1

The IRS does not let you defer withdrawals from a traditional IRA inherited from someone other than your spouse until your retirement age.

IRS Pub 590

If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. This means that you cannot make any contributions to the IRA. It also means you cannot roll over any amounts into or out of the inherited IRA. However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary.

Like the original owner, you generally will not owe tax on the assets in the IRA until you receive distributions from it. You must begin receiving distributions from the IRA under the rules for distributions that apply to beneficiaries.

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If the beneficiary is an individual, to figure the required minimum distribution for 2010, divide the account balance at the end of 2009 by the appropriate life expectancy from Table I (Single Life Expectancy) in Appendix C

Answer 2

One note to add to Alex' - The RMD divisor for a beneficiary is decremented by one each year, the table is not consulted each year as an over 70-1/2 account holder (of own account) would. A small, but important, distinction.