Why Your Custodian Won’t Calculate Your Inherited IRA RMD
The problem isn’t the math. It’s identifying which rule applies before doing any math.
One of the most common questions I get from people who inherit an IRA is:
“Why won’t the custodian just tell me what I have to take?”
They can show the balance. They offer calculators. They send statements.
But when it comes to the actual required distribution, the answer is usually:
“It depends.”
That’s where the confusion starts.
Why do people expect custodians to calculate it
For IRA owners taking lifetime RMDs, the process is usually straightforward. The custodian has the account balance and the owner’s age, and in many cases can calculate and report the distribution.
That creates an expectation.
Clients assume inherited IRAs should work the same way.
But inherited IRA RMD rules depend on more than a balance and a birthday. They depend on who the beneficiary is, when the original owner passed away, whether required distributions had already started, and how the account is structured.
That’s not administration. It’s interpretation with tax consequences.
Why calculators exist—but determinations don’t
Custodians typically provide tools and general education, but they stop short of beneficiary-specific determinations.
Calculators assume the correct rule has already been identified.
If the wrong rule is selected, the output may look precise while being incorrect.
The issue is not the calculation.
It’s the assumption behind it.
The facts custodians usually don’t know
A custodian may know the account balance. That does not mean they know the facts required to determine the correct rule.
For example, they may not reliably know:
Beneficiary classification under the tax rules
Whether the original owner died before or after their required beginning date
Whether there are multiple beneficiaries and whether accounts were split on time
Whether a trust is involved and how it is structured
Whether prior distributions were taken or missed
Even when some of these details are available, their interpretation affects the outcome.
IRS guidance has been evolving
Inherited IRA RMD rules changed significantly under the SECURE Act.
Subsequent guidance has continued to clarify how those rules apply in practice, including multiple IRS notices addressing interpretation issues and penalty relief.
That evolving framework is one reason custodians avoid making final determinations.
Two examples where the rule changes everything
Example A (non-spouse beneficiary) A non-spouse beneficiary inherits an IRA after the original owner had already started required distributions. There are multiple beneficiaries, and the accounts were not separated by the applicable deadline.
Depending on how the rules apply, this can result in the 10-year rule with annual distributions required during years 1–9.
Example B (spouse beneficiary) A spouse inherits an IRA where the original owner had already reached the required distribution age, but the spouse has not.
In this situation, the decision between remaining a beneficiary or completing a spousal rollover can change the timing and structure of future distributions.
Each option follows a different set of rules and may lead to different tax outcomes over time.
Examples for illustration only. Outcomes depend on the specific facts.
Why does this become a planning decision
Inherited IRA distributions are often framed as a compliance question.
How much needs to be distributed?
In many cases, the better question is how distributions should be structured over time within the rules.
Even identical account balances can lead to very different tax outcomes depending on how distributions are timed. Annual distributions, deferring until later years, or spreading distributions across the full period can each produce different results.
That decision is not part of the custodian’s role.
The real issue is classification
Most inherited IRA mistakes are not calculation errors.
They come from applying the wrong rule.
A typical sequence looks like this:
Identify the beneficiary type
Confirm whether the original owner had started required distributions
Review how the account is titled and whether multiple beneficiaries exist
Determine the applicable rule
Then calculate and plan distributions
The applicable rule depends on facts and interpretation and should be confirmed before acting.
Penalties and relief
Missing a required distribution can result in penalties.
In some cases, the IRS may waive those penalties when the issue is corrected and properly explained.
This is another reason custodians avoid making beneficiary-specific determinations.
Final thought
Custodians are not withholding answers.
They are generally avoiding determinations that depend on facts and interpretation outside their role.
Because the challenge is not performing the calculation.
It’s identifying the correct rule before the calculation begins.
Sources:
IRS Publication 590-B (Distributions from IRAs); IRS Publication 559 (Survivors, Executors, and Administrators); Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019; SECURE 2.0 Act of 2022; IRS Notices 2022-53, 2023-54, and 2024-35; Final Treasury Regulations on Required Minimum Distributions (2024).
Disclosure
This material is for informational purposes only and is not intended as tax or legal advice. Individual situations vary.
Comments