Heirs May Owe a Parent's Missed RMD After a Late-Year IRA Inheritance
When a traditional IRA owner dies after their required beginning date without taking that year's required minimum distribution, the beneficiary must withdraw the remaining amount by December 31. A $10,000 inherited RMD is taxed as ordinary income to the heir, potentially adding roughly $2,200 in federal tax for a median earner. Non-spouse beneficiaries also generally must empty the inherited IRA within ten years, so timing withdrawals can affect the total tax bill.
If a traditional IRA owner passes away on or after the required beginning date, the beneficiary must calculate and take the deceased owner’s RMD for that year. The calculation assumes the owner lived the whole year, so even a November death does not reduce the amount. For owners born in 1951 or later, that date is linked to age 73.
The withdrawal is included in the beneficiary’s gross income and taxed at their marginal rate. Missing it triggers a 25% excise tax on the shortfall, plus ordinary income tax when funds are eventually withdrawn. Non-spouse beneficiaries also generally have to deplete the inherited account by the end of a ten-year window, and yearly distributions are generally mandated.
This rule may create sudden tax liabilities for heirs, especially median earners who inherit late in the year. A $10,000 RMD could consume much of average annual savings, while a missed deadline may add a 25% penalty. The 10-year withdrawal requirement may also push beneficiaries to plan distributions around lower-income years, potentially influencing household cash flow and long-term financial security.