I have actually inherited 2 IRAs from my aunt. One is fairly easy to calculate because I was the named beneficiary. I used the single life expectancy table and based it on my life expectancy. Vanguard also calculated it for me and came up with the same amount.
On the second IRA I was not the named beneficiary. It passed to the estate and then was divided evenly between the 3 beneficiaries of the estate. Vanguard cannot calculate this for me and so I need help.
Here are the details:
• Birthdate of Deceased: Sept 27 1936
• Date of passing: Feb 14 2011
• Deceased was 74 when she died, but would have turned 75 later in the year.
• The account was divided evenly in 3 and distributed to each of the 3 benefiaries.
• The balance of my portion of the account on December 31, 2011 was $122,835.27.
This is what I found on the irs site:
Beneficiary not an individual. If the beneficiary is not an individual, determine the required minimum distribution for 2012 as follows.
Death on or after required beginning date. Divide the account balance at the end of 2011 by the appropriate life expectancy from Table I (Single Life Expectancy) in Appendix C. Use the life expectancy listed next to the owner's age as of his or her birthday in the year of death, reduced by one for each year after the year of death.
It may seem straightforward but I am still confused, especially about the last part (reduced by one for each year after the year of death).
My Aunt was 74 when she died in February 2011, but her birthday was in September and she would have been 75 that year so I think I use 75. In the table for 75 it says life expectency 13.4 so do I divide the balance by 13.4, or do I devide it by 12.4 because she died in 2011 and it is now 2012? And then what do I use next year, 11.4?
One more question. When I have Vanguard take out the RMD, what percentage of taxes should I have withheld? I am in the 28% tax bracket so should I have them withhold 28%? I am the type of person who does not want to pay in a lot of extra tax at the end of the year.
I really really appreciate the help!
Tarabara