Ask the Hammer: What Are The Distribution Rules for Beneficiaries of Inherited IRAs?

Robert Powell, CFP®

What are the the distributions rules for beneficiaries of inherited IRAs?

That's the gist of a question posed by a Retirement Daily reader to Jeffrey Levine, the director of advanced planning at Buckingham Wealth Partners.

And the answer is, well, complicated. 

It's complicated because the rules changed when the SECURE Act. If someone inherited an IRA prior to 2020 the rules are different than if someone inherited an IRA in 2020. 

If you inherited an IRA prior to 2020, your beneficiaries could stretch the required minimum distributions based on their life expectancies. 

But if you inherited an IRA in 2020 (or later) you have to use the new distribution rules; now most non-spouse beneficiaries will be required to deplete their accounts within 10 years after the original owner’s death. Read The (Partial) Death Of The Stretch IRA: How The SECURE Act Impacts Inherited Retirement Accounts

To be fair, the correct answer depends on the exact facts and circumstances.

For instance, eligible designated beneficiaries have different rules. Those beneficiaries, which include individuals who are spouses of account holders, those who have a disability or chronic illness, those not more than 10 years younger than the decedent, minor children of decedents, or “see-through” trusts, are generally subject to the same rules prior to the SECURE Act, according to an article penned by Levine for 

"It's just very complicated right now because we're right in the change between the old law and the new law," said Levine.


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