3 Inherited IRA Rules That Changed and Still Trip People Up
Patrick Thompson
3 Inherited IRA Rules That Changed and Still Trip People Up
If you've inherited an IRA, these changes could significantly impact your tax strategy:
1. The 10-Year Rule. Most non-spouse beneficiaries must now withdraw all funds within 10 years, eliminating the stretch IRA option that allowed lifetime distributions.
2. Annual RMDs During the 10-Year Period. If the original owner was taking RMDs, beneficiaries may need annual distributions throughout the 10 years, not just a final withdrawal.
3. Spouse vs. Non-Spouse Treatment: Spouses retain flexibility options like treating the IRA as their own. Non-spouses face more restrictive rules.
These changes can create compressed tax exposure. Strategic planning is essential to minimize the impact.
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