How to Calculate the RMD of an Inherited IRA

IRAs offer tax-shelterd growth.

RMD stands for "required minimum distribution," which is the annual withdrawal people must take from traditional IRAs starting in the year they reach age 70 1/2. If you inherit an IRA, you must start taking RMDs in the year that the person you inherited the IRA from would have turned 70 1/2. To calculate your RMD, you need to know your IRA's value and your life expectancy according IRS tables.

Things You'll Need

• IRS Publication 590
• Calculator

Instructions

1. Consult your financial records to determine the value of your inherited IRA as of Dec. 31 of the previous year.

2. Look at Table 1, the single life expectancy table found in IRS Publication 590, to find your life expectancy. For example, if you are 39, you would find your life expectancy to be 44.6 additional years.

3. Divide the value of your inherited IRA by your life expectancy according to IRS Publication 590 to find the minimum amount of money you must take for your RMD. For example, if your IRA was valued at $47,000 and your life expectancy was 44.6 years, you would have to withdraw $1,053.81 for the year. Your RMD will change each year.

References

• IRS: Publication 590
• Investopedia: Required Minimum Distributions
• Schwab: Inherited Retirement Account Guide

Resources

• IRS: Distribution Tables