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You must take an RMD for the year of death (if the account holder did not already take it).If your spouse (the account holder) had already reached their required beginning date to start taking Required Minimum Distributions (RMDs) 73 or over: Option #1: Spousal transfer (treat as your own) Account types You may move to a higher tax bracket depending on the amount of the distribution and your current income level.You will pay income taxes on the distribution all at once.All assets in the Traditional IRA are distributed to you. Option #4: Lump sum distribution Account type Undistributed assets can continue growing tax-deferred for up to ten years.Option #3: Open an Inherited IRA: 10-year method Account typeĪt any time up until 12/31 of the tenth year after the year in which the account holder died, at which point all assets need to be fully distributed. Undistributed assets can continue growing tax-deferred.You will not incur the 10% early withdrawal penalty.Required Minimum Distributions (RMDs) are mandatory and you are taxed on each distribution.If multiple beneficiaries, separate accounts must be established by 12/31 of the year following the year of death otherwise, distributions will be based on the oldest beneficiary.Your annual distributions are spread over your single life expectancy, which is determined by your age in the calendar year following the year of death and reevaluated each year.12/31 of the year following the year of death.ĭistributions must begin no later than 12/31 of the year the account holder would have reached 73.The year in which the decedent would have attained age 73, or.Required Minimum Distributions (RMDs) are mandatory, and you have the option to postpone distributions until the later of: You transfer the assets into an Inherited IRA held in your name.

Option #2: Open an Inherited IRA: Life expectancy method Account type You may designate your own IRA beneficiary.If you are under 59½ you'll be subject to the same distribution rules as if the IRA had been yours originally, so you cannot take distributions without paying the 10% early withdrawal penalty-unless you meet one of the IRS penalty exceptions.IRA assets can continue growing tax-deferred.Only available if you are the sole beneficiary.You transfer the assets into your own existing or new IRA.Īt any time, but a penalty will apply to withdrawals made before you reach age 59½. If your spouse (the account holder) died before their RMD required begin date, these are your choices: Option #1: Spousal transfer (treat as your own) Account type Most commonly, those who inherit an IRA from a spouse transfer the funds to their own IRA. If you inherit a Traditional, Rollover, SEP, or SIMPLE IRA from a spouse, you have several options, depending on whether your spouse died before or after their required beginning date to start taking Required Minimum Distributions (RMDs). If you are named as the beneficiary in an estate, you should consult your estate or financial planner. Please also note that the below options are for individuals that are specifically named as the beneficiary on the decedent’s IRA account. If the account holder died before 2020, and therefore is not subject to the changes in the SECURE Act, you can learn about distributions options in our Inherited IRA Brochure that covers scenarios prior to the SECURE Act, here. You can also review additional information in our Inherited IRA Brochure (SECURE Act compliant). This guidance is also for situations where the IRA account holder died after 2022, and therefore, the rules under the SECURE Act and SECURE 2.0 Act apply. These rules don't apply if you've simply transferred another IRA to your own IRA but are specific to Inherited IRAs.

With an Inherited IRA, you may either need to take annual distributions no matter what age you are when you open the account or may be required to fully distribute the assets in the account within a specified number of years, or in some cases a combination of both.