Calculating Minimum Required Distributions


	Investment Products > Retirement Accounts >

How to Calculate

To determine the minimum required distribution (MRD) for the first year (the year following the year of death), you generally divide the fair market value of your Inherited IRA as of December 31 of the year of death, by the appropriate Single Life Expectancy factor. If you don't take the required minimum, you are subject to a penalty equal to 50% of the amount that should have been withdrawn, but wasn't.

The 5-Year Rule

If the account owner died prior to age 70½, you may also elect to use the 5-Year Rule.

Under the 5-Year Rule, you:


•		Can withdraw from your IRA assets at any time, in any amount
•		Must withdraw all assets by December 31 of the fifth anniversary year following the IRA owner's death.

As long as the account is depleted within this timeframe, the MRD penalties will generally be waived.

MRDs for Surviving Spouses

Surviving spouses transferring assets to an Inherited IRA use the Single Life Expectancy Table. Note: The MRD Calculator in the Retirement Investment Center does not take into account regulations pertaining to IRA inheritance.

Year of Death	2004
First MRD Required (year following death)	2005
Age of Beneficiary (Surviving Spouse) in 2005	65
Fair Market Value of Inherited IRA on 12/31/2004	$100,000
2005 Life Expectancy Factor (based on the Single Life Expectancy Table)	21.0
2005 MRD Amount
2006 Life Expectancy Factor (revised annually for spouse beneficiaries based on the Single Life Expectancy Table)	20.2
2006 MRD Amount	12/31/2005 Fair Market Value ÷ 20.2

MRDs for Surviving Children or Other Persons

If the IRA owner had designated multiple primary beneficiaries, then there are two possible scenarios for those beneficiaries. One scenario is for the beneficiaries to establish separate Inherited IRAs by December 31 of the year following the original IRA owner's death. If this occurs, then the MRD for each separate Inherited IRA will generally be based on each respective beneficiary's Single Life Expectancy. Each year thereafter, this factor continues to be reduced by one. The other scenario is if the separate Inherited IRAs are not established by December 31 of the year following the original IRA owner's year of death. In this case, the MRD amount will generally be based on the oldest beneficiary's Single Life Expectancy for all accounts. Each year thereafter, this factor is reduced by one.

Year of Death	2004
First MRD Required (year following death)	2005
Age of Beneficiary in 2005	46
Fair Market Value of Inherited IRA on 12/31/2004	$100,000
2005 Life Expectancy Factor (based on the Single Life Expectancy Table)	37.9
2005 MRD Amount
2006 Life Expectancy Factor (subtract one from previous year's factor)	36.9 (37.9 - 1.0)
2006 MRD Amount	12/31/2005 Fair Market Value ÷ 36.9

If the IRA owner had designated multiple primary beneficiaries and the Inherited IRA was not established until after December 31 of the year following death, MRDs will be based on the life expectancy of the oldest beneficiary for all remaining year MRD calculations.

The information provided by Fidelity Investments is general in nature and should not be considered investment, legal or tax advice. Fidelity does not provide investment, legal or tax advice. Consult with a legal or tax professional regarding your unique tax situations.


	If You Inherit a Roth IRA

	If you inherit a Roth IRA rather than a Traditional IRA and transfer the assets to an Inherited Roth IRA —unlike the original owners—you are required to take minimum distributions. As long as the assets have been in the Roth IRA for five or more years, minimum distributions can be withdrawn tax-free.


		Next Steps

	One of the easiest ways to ensure you're meeting the IRS-required minimum distributions is to take advantage of Fidelity's Automatic Withdrawal Service.

	When you complete an Inherited IRA Automatic Withdrawal Service Form to elect this service, based on the information you provide, Fidelity will:

		Automatically calculate the minimum amount you need to withdraw from your IRA assets each year

		Direct those withdrawals to you, your bank account, or into a Fidelity non-retirement account that you specify.

		Notify you annually each January of your MRD amount and schedule for the year.