Hi I have a beneficiary ira account that needs to be fully depleted by the end of this year under a 5 year rule. Relative died in 2020 and I am more than ten years younger and had been previously told a 10 year rule would apply. Mother has similar situation except she was 68 when relative passed and had been under the impression she would just start taking RMDs at the appropriate age. They’re telling me options for rollovers expired end of 2024. Is there anything we can do? Freaking out a bit because the tax implications are horrendous as it was just explained to me. Haven’t touched the money yet except for when it was put in our names.
Any insight or next steps would be greatly appreciated. Checking on local tax advisors in my area but know so little about what the rules are now and options.
Notified large account must be depleted end of this year under a 5 year rule when I’d been told other rules would apply. Need help
byu/Bright_Meat820 intax
Posted by Bright_Meat820
2 Comments
Who told you the 10-year-rule doesn’t apply, and why? SECURE 2.0 applies if the original owner died after 12/31/2019.
[I am not a tax professional. I am the beneficiary of an Inherited IRA and I am taking RMD’s every year.]
How old was the relative who died? You said they were more than 10 years older than you. Were they more than 10 years older than your mother?
Assuming that the relative was subject to RMD’s, you would be too. You would have 10 years to withdraw the funds. 2025 is the first year that the IRS will enforce the 10 year RMD rule, so you would just have to withdraw starting this year. If there are significant funds, you would want to stretch those withdrawals out over the next 5 years to minimize your taxes.
If your mother was within 10 years of the age of the relative, she has different options. One option is that she could transfer the IRA to her name and start taking RMDs only when she reaches the age of 75.
I do not know why anyone would say that the 5-year-rule applies. Your tax advisor will be able to help you. Make sure to find one who has experience in this area though.