How to Use the Calculator
This tool helps you estimate your Required Minimum Distribution (RMD) from an inherited IRA. Follow these steps for an accurate estimate:
- Select Your Beneficiary Type: This is the most critical step. Are you an
EDB(spouse, minor child),DB(most other individuals like an adult child), or anNDB(an estate or charity)? - Enter Owner’s Date of Death: This determines if the newer SECURE Act rules apply (for deaths in 2020 or later).
- Did Owner Die After RBD?: Select “Yes” if the original owner had already started taking their own RMDs. This significantly impacts the rules.
- Provide IRA Balance: Use the fair market value of the IRA as of December 31st of the previous year.
- Enter Life Expectancy Factor: If your distribution is based on life expectancy (e.g., for EDBs), you must find your age-based factor from IRS Publication 590-B, Table I, and enter it here.
Navigating Beneficiary Distributions: A Human Guide
The Inheritance That Comes with Homework
Receiving an IRA from a loved one is a meaningful financial gesture. But unlike a simple bank account, it comes with a set of instructions from the IRS known as Required Minimum Distributions, or RMDs. Think of it as homework: you have to do it, you have to do it on time, and there are penalties if you get it wrong. The rules, especially after the SECURE Act changed the game in 2020, can feel like navigating a maze in the dark. The goal of this guide is to turn the lights on.
Who Are You to the IRA? The Three Beneficiary Roles
The entire rulebook for your inherited IRA is based on one simple question: what is your relationship to the original owner? The IRS sorts every beneficiary into one of three buckets.
- Eligible Designated Beneficiaries (EDBs): This is the VIP list. It includes surviving spouses, the owner’s minor children, disabled or chronically ill individuals, and anyone not more than 10 years younger than the owner. EDBs generally get the best deal: the ability to “stretch” distributions over their own lifetime, allowing the account to grow for decades.
- Designated Beneficiaries (DBs): This is the most common group for non-spouse heirs, like adult children or grandchildren. If you inherited after 2019, you are likely subject to the 10-Year Rule. This is a hard deadline: the entire account must be emptied by the end of the 10th year after the year the owner died.
- Non-Designated Beneficiaries (NDBs): This isn’t a person, but an entity. If the IRA was left to an estate, a charity, or a certain type of trust, it’s an NDB. These face the strictest and fastest withdrawal schedules, often a 5-Year Rule.
The Two Main Timelines: A Slow Stretch or a Fast Deadline
Once you know your beneficiary type, you can figure out your timeline. EDBs can often use the Life Expectancy Method. To calculate their RMD, they take the IRA balance and divide it by a “life expectancy factor” from an IRS table. It results in a relatively small withdrawal each year.
Most other beneficiaries face a hard deadline. The 10-Year Rule for DBs is the most prominent example. A critical detail many miss: if the original owner had already started taking their own RMDs (i.e., they died after their Required Beginning Date), you may also have to take annual RMDs during the 10-year period. If they hadn’t, you might be able to wait and take it all in year 10. This calculator helps you identify which rule likely applies, so you can plan accordingly and avoid a surprise tax bill.