Suze Orman on Inherited IRA RMDs: Do You Owe One Every Year of the 10-Year Window?

A non-spouse beneficiary of inherited traditional IRAs generally must withdraw all funds by the end of the tenth year after the original owner’s death. Annual required minimum distributions are not required during that period when the decedent died before reaching the required beginning date for traditional IRA distributions. The required beginning date for a traditional IRA is April 1 of the year after the owner turns 73. If death occurs before that date, the beneficiary follows the 10-year rule without interim RMDs. The beneficiary can plan withdrawal timing to manage taxable income, including spreading withdrawals across years or concentrating them in lower-income years, while still emptying the accounts by year 10.

"Kim does not owe an annual RMD. Under the SECURE Act, Kim falls into the bucket of non-spouse beneficiaries who must empty the inherited IRAs by the end of year 10, but who do not owe yearly RMDs along the way. The reason sits in one detail most heirs miss: the decedent was 62 and had not taken a single withdrawal."

"That matters because the IRS splits inherited IRA treatment based on whether the original owner died before or after their required beginning date (RBD), which for traditional IRAs is April 1 of the year after the owner turns 73. A 62-year-old had not reached RBD. When death happens before RBD, a non-eligible designated beneficiary gets the 10-year rule with no interim RMDs. Empty by year 10. That is the whole obligation."

"Say the two inherited IRAs total $400,000. Kim has until December 31 of year 10 to clear them. Three realistic paths: Equal annual draws. Roughly $40,000 a year. Predictable, but it stacks taxable income on top of any future Social Security and pension income she eventually turns on. Front-load the low-income years. Kim is 68, retired, and has not started Social Security"

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