James Suazo, ChFC®, is quoted on this topic, answering a reader’s question on NJMoneyHelp.com by Karin Price Mueller, “I have an inherited IRA. How soon do I have to take distributions?”, originally published on November 30, 2021.
A 30-second read by James Suazo, ChFC®: If your inherited IRA falls under the 10-year rule, the IRS has clarified the rule in their publication 590-B (https://www.irs.gov/pub/irs-prior/p590b--2020.pdf ).
If the deceased passes on or before December 31, 2019, the 10-year rule does not apply.
According to the IRS publication 590-B: “The 10-year rule requires the IRA beneficiaries, who are not taking life expectancy payments, to withdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death. For example, if the owner died in 2020, the beneficiary would have to fully distribute the plan by December 31, 2030. The beneficiary is allowed, but not required, to take distributions in years 1-9, but the full amount is required to be distributed within the 10th year.”
We recommend coordinating with an accountant to determine the best distribution strategy for your specific situation.
If you have any further questions, please reach out to your Baron Team.
Disclosure: This is a general communication being provided for informational purposes only. Past performance is no guarantee of future results. Every investment strategy has the potential for profit or loss. This material is not intended to be relied upon as a forecast, research, tax or investment advice. Please consult your tax planning professional for personal tax advice.