While many investors welcome a windfall, the rules for inherited individual retirement accounts are complicated — and mistakes can be costly.
Since 2020, certain inherited accounts are subject to the “10-year rule,” and heirs must empty the balance by the 10th year after the original account owner’s death.
Plus, some non-spouse beneficiaries, commonly adult children, must begin taking required minimum distributions, or RMDs, in 2025 over the 10-year period, or face a hefty IRS penalty.
Inherited IRA planning is important amid the “great wealth transfer,” with more than $100 trillion expected to change hands through 2048, according to a December report from Cerulli Associates.
Stories for investors who are retired or are approaching retirement, and are interested in creating and managing a steady stream of income:
