If you are the sole beneficiary of your spouse's IRA, you can treat the IRA as your own. If not, you need to know how to tax minimum required distributions to avoid paying more penalties than necessary to the Internal Revenue Service (IRS). You have the option of distributing the entire IRA within five years of inheriting it. However, if you prefer to keep the money in the account as long as you can to take advantage of the tax-sheltered growth, you can calculate your minimum distributions.
Use your age to figure the initial life expectancy if the original owner of the IRA died before the first required distribution. If the owner died after the first date of required distributions, use the longer of your life expectancy or the owner's life expectancy at the date of death.
Find the life expectancy for the first minimum required distribution by using the Single Life Expectancy Table in IRS Publication 590, Appendix C. For example, if you are 35 in the year the owner dies, your life expectancy equals 48.5.
Subtract 1 for each year since the IRA owner died. For this example, if you are calculating your minimum required distribution six years after the original owner died, subtract 6 from 48.5 to get a life expectancy of 42.5.
Divide the value of the IRA as of the end of the prior year by your life expectancy to find your minimum required distribution. In this example, if your IRA was worth $87,000 at the end of the year, divide $87,000 by 42.5 to find your minimum required distribution equals $2,047.06.
Items you will need
- IRS Publication 590
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