I live in the USA. I inherited an IRA from my father who passed away in 2019. I did not gain access to the account until 2025 due to the estate going through probate. I have received guidance from a CPA who told me I must completely liquidate the account this year and pay additional penalties for not taking the necessary RMDs despite not having access to any of the account(s).
I believe a second opinion is warranted. Can anyone provide guidance or provide links to reading material to help me better understand my situation?
Inherited IRA took 6-years to go through probate. Now I’m being told I have to liquidate everything this year. What do I do?
byu/Tngaco24 inpersonalfinance
Posted by Tngaco24
10 Comments
Pretty sure they are right and whom ever was in charge of managing the estate should have been following rmd rules (assuming applicable)
Probate does not override mandatory rmd or timed liquidations
Inh. IRAs don’t typically go through probate. Doubt it will need to be dist in one year. Even so, no one will check.
I believe if you are a non-designated beneficiary, the IRA should have been rolled into an estate IRA and the estate should have taken the RMD. When the estate transfers the IRA to you, the estate IRA rolls over into an inherited IRA, and you continue to take the RMD.
This is a finance question, glad you got the gut feeling to ask for second opinion because half of the accountants don’t know finance, they know accounting.
The law is you have to completely liquidate within 10 years and the account is subject to rmd rules which means you’ll likely need to do a bulk sale of 6 years worth of rmd.
Were you a designated beneficiary? I thought most times the IRA would go directly to the beneficiary and not through probate. Sorry, doesn’t help with your RMD issue, but I’m confused why you wouldn’t have received the money in the first year. I was administrator for an estate in probate, and I was able to get a 401k distributed to the only beneficiary before probate even started.
as i understand the rules are as follows:
a) you get the ira.
you can withdraw when the original person would have reached 65
or you are forced to take the MRD amount when they reach that age.
you are not forced to liquidate the whole thing.
i would talk to a tax person who does taxes a cpa does not always do taxes
From what i was told you have 10 years to liquidate it. So if they count the 6 year probate you should still have 4 years to liquidate.
If it went through probate then you are the beneficiary of an estate and the IRA is the asset. Otherwise, upon the owner’s death, you would have had an inherited IRA and have to start withdrawing funds. Since it went through probate, the estate itself should have been taking those distributions and paying tax on them. When you get it from the estate, then you continue getting the distributions. You shouldn’t owe any back taxes or penalties.
I would talk with the institution that the IRA is held at. They deal with this stuff all the time. Here is some info from inherited IRAs from MorningStar: [Inherited IRA](https://www.morningstar.com/retirement/inheriting-an-ira-through-an-estate)
I’m going through this now. It’s a bit different for me since my dad passed after the 2020 changes, but it largely depends on if they had begun taking RMD’s. [Here’s a page from Fidelity that explains it](https://www.fidelity.com/learning-center/personal-finance/retirement/non-spouse-IRA).