Beneficiary Required Minimum Distributions (RMD) - Advanced Options
This calculator is designed for the SECURE Act of 2019 new RMD rules that apply to non-spouse Designated Eligible Beneficiaries as part of The SECURE Act of 2019. Using the additional RMD options available is a choice made when the account is inherited. Non-spouse Eligible Designated Beneficiaries include a child of the account owner that is under age 21 or are permanently disabled or are chronically ill. A child, once they reach 21, is no longer considered an Eligible Designated Beneficiary and the 10-year distribution rule will apply starting in the year they turn 21. For more information please see Modification of Required Distribution Rules for Designated Beneficiaries.
This calculator uses the pre-SECURE Act rules when an original account owner died on or before 12/31/2019.
The pre-SECURE Act RMD calculations are used if the beneficiary is 10 or less years younger than the original account owner or an if the beneficiary is classified as an Eligible Designated Beneficiaries.
The SECURE Act of 2019 doesn't change a spouse's option to treat inherited account as his or her own. In this case, no distributions are required until the year in which the spouse reaches age 75 (or 70 1/2 if you were born before 7/1/1949, 72 if you were born 7/1/1949 to 12/31/1951, 73 if you were born 1/1/1951 to 1/1/1960). This calculator assumes that a spouse will wish to treat an inherited IRA as their own.
If the account owner was younger than the beneficiary, and it was past the required begin date for required minimum distributions when the account owner died, the beneficiary can choose to use the account owner's life expectancy to calculate Required Minimum Distributions (RMD). In this special case, the result will always produce a lower RMD. If this situation occurs, this calculator will use the account owner's age to determine the applicable life expectancy when calculating RMDs.
A proposed rule for the SECURE Act was released on February 23, 2022. When finalized the new rule will change the way the RMDs are treated for non-spouse Designated Beneficiaries that use the SECURE Act 10-year rule for distributions. Originally the required distributions under the 10-year rule required all funds to be withdrawn by the end of the year following the 10th anniversary of the account owner's death without regard to RMDs.
The proposed rule requires a beneficiary to withdraw an RMD for year 1 through 9 if the original account owner had already begun taking RMDs themselves. The remainder would then be required to be withdrawn in its entirety in year 10. This calculator follows the proposed rule with RMDs for year 1 through 9 if the account owner had required distributions before their death. All remaining funds are then required to be withdrawn in year 10. However, IRS Notice 2023-54 eliminated the penalties for not taking this RMD in 2020 through 2023. It is strongly advised you seek professional guidance in all RMDs and especially with beneficiary RMDs.
This calculator only applies to the first-generation beneficiary not a second-generation beneficiary. In the event of the first beneficiary's death, the second beneficiary should contact their own tax advisor for information on the appropriate RMD calculation.
If the account owner was younger than the beneficiary, and it was past the required begin date for distributions when the account owner died, the beneficiary can choose to use the account owner's life expectancy to calculate Required Minimum Distributions (RMD). In this special case, the result will always produce a lower RMD. If this situation occurs, this calculator will use the account owner's age when calculating RMDs. Other than using the account owner's age at death, the calculation is identical.
| Non-spouse choosing longest distribution time-frame | Calculate the non-spouse and non-Eligible Designated Beneficiary option that allows for the longest time-frame for distributions. This includes the ability to spread distributions over the beneficiary's life expectancy if they are not more than 10 years younger than the account owner. |
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| Person choosing 10-year RMD rule (if available) | Calculate using the 10-year RMD rule even if other options may be possible. If the account owner died on or before 12/31/2019, the 10-year RMD rule is not an available option and the pre-SECURE Act rules for a non-spouse will be used. |
| Surviving spouse | This option will treat the inherited account as the spouse's own account. Distributions will not be required until they reach the RMD required start date for their birthdate. |
| Disabled or chronically ill person | This option treats the individual as an Eligible Designated Beneficiary. Distributions are extended over the beneficiary's life expectancy using the pre-SECURE Act rules. |
| Account owner's child | This option treats the individual as an Eligible Designated Beneficiary up to and including the year the beneficiary turns 21. The year after they attain the age of 21 the 10-year RMD rule will apply. In this situation RMDs based on the beneficiaries life expectancy are required during the 10-year RMD rule period. |
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.