Tax Tip #228

As of last year, taxpayers who inherited an IRA from someone who passed away after 2019 and who was already taking required minimum distributions (RMDs) at the time of the death were allowed to choose not to take distributions based on their own life expectancy. 

Beginning in 2025, these beneficiaries will need to follow RMD rules as outlined in the 2002 regulations for ten years following the death of the original beneficiary. This means that instead of the annual distributions he or she was previously taking, life expectancy distrubtions must be taking for for the first nine years after the original IRA owner's death. By the end of the tenth year, the entire remaining balance in the IRA must be fully distributed.