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Author: ragie Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: Re: Inherited IRA question Date: 11/19/2009 3:23 PM
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I'm not sure if anyone has addressed the "RMD exclusion" in this thread or not so I thought I'd post it because I've been researching it for awhile for myself and came across this thread.

The RMD does not have to be taken (it can be waived) in 2009 for your 2008 inherited IRA, even if non-spousal. I confirmed this with my broker and the RMD suspension rule for this year and last year - just within the last few days. This was done for both 2008 and 2009 because of the economy/recession for all IRA holders, inherited or not and the values of all IRA's were down. My parents also do not have to take their RMD's and they are in their 80's.

Unless Congress extends that exemption of RMD again, you do not have to take the RMD this year but will start in 2010 (you should get notified in January 2010 what the amount will be by your brokerage account holding the inherited IRA) and it should be based on the value of the IRA at the end of the year you inherited it. Also it should be based on your age and expected "single life expectancy." See IRS Publication 590 for 2008 for details on that. Also if you are or become disabled, get publication 524 for some additional rules as the penalties are waived etc.

In my case, the end of year value of the Inherited IRA for 2008 helps reduce the RMD amount because the amount of the IRA I received was down over 50% on 12-31-08 compared to when I inherited it in May, 2008. It may help you too.

I'm also exploring another area of IRS Regulations that I'm not sure are applicable to you or myself but the NUA (net unrealized appreciation) in IRS Publication 575 for 2008 may allow you to take a lump sump of that Inherited IRA and reduce the tax amount, which may make sense if you need to free up some funds. Make sure you get the publications for the year inherited it.

Of course Congress changes rules all the time, so who knows what will happen next year?

I hope this helps you if you didn't already know about this. :)

I'm not an expert by any means when it comes to this but I've had to research it for myself and thought I would share.

I'm so sorry that you lost your mother. Take care and let me know if I've helped or if you need some of the research I have.

Ragie
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