How to Calculate RMD for Deceased IRA

If Mom and Dad planned well by clearly naming you as a beneficiary, it will make things easier.
i Jupiterimages/Comstock/Getty Images

If Mom or Dad died, leaving you the beneficiary of an IRA, you're probably feeling appreciative — but you also may be feeling a little overwhelmed. If it's a traditional IRA, you will pay taxes on all or most of what you take out, so you'll want to make your decisions carefully. Basically, you have two options: Take the entire value of the account within five years or spread it out by taking at least the required minimum distribution, or RMD, from the account each year. If you decide to take RMDs, you will need to calculate them according to IRS rules.

Step 1

Confirm the IRA owner's age at the date of her death. If she was 70 1/2 or older, you basically have two choices: You can base the RMD on the longer of your life expectancy or the owner's life expectancy calculated using Table I in IRS publication 590. If the owner died before reaching age 70 1/2, then you have to base RMD on your life expectancy.

Step 2

Check the plan statement and contact the plan administrator to find out what the IRA account was worth at the end of the prior year, that is, the end of the year during which the IRA owner died. So, if Mom or Dad died in 2011, you will have to take your first RMD in 2012, but you will base it on the value of the account at the end of 2011.

Step 3

Visit the IRS website and use Publication 590, Appendix C, Table I to find your life expectancy. You will use the age you will be on your birthday that occurs in the year following the year in which the IRA owner died. Again, if the owner died in 2011, you will base your life expectancy on the age you will turn in 2012. For example, if you turn 35 on November 15, 2012, your life expectancy would be 48.5 years according to the table. The same would apply even if your 35th birthday were December 31, 2012.

Step 4

Divide the value of the account at the end of the prior year, in this case 2011, by your life expectancy to get your RMD for 2012. So, if Mom or Dad's IRA was valued at $50,000 at the end of 2011, and you turned 35 in 2012, the RMD for 2012 would be $1,030.92. You will have to recalculate the RMD for each subsequent year until the entire account is distributed.

the nest