Inherited a retirement account?
Inherited an IRA or 401(k)
Inherited retirement accounts follow their own set of rules, separate from your own retirement savings — and those rules have changed in recent years.
Inherited a retirement account?
Inherited retirement accounts follow their own set of rules, separate from your own retirement savings — and those rules have changed in recent years.
An inherited IRA or 401(k) is not treated the same as your own retirement account. What you're allowed to do with it, how quickly you may need to take money out, and what it means for your taxes all depend on factors like your relationship to the person who passed away, their age, and whether they had already started taking required distributions.
Rules for inherited retirement accounts were significantly reworked by the SECURE Act, and the IRS has continued to issue and finalize guidance on exactly how those rules apply — including confirming that many non-spouse beneficiaries must take annual required distributions during a 10-year payout window, not just a single distribution at the end of it, with real tax penalties for missing one. This is an area where the rules have shifted more than once in the last few years, so what you may have heard even a couple of years ago could be out of date.
A surviving spouse generally has more flexibility, including the option in many cases to treat the account as their own.
Most other beneficiaries (adult children, siblings, etc.) are generally subject to a defined payout window, with distribution rules that can depend on the original owner's age and RMD status.
Minor children, disabled or chronically ill beneficiaries, and beneficiaries less than 10 years younger than the original owner can fall under different rules than the general case.
When an estate or a trust is the named beneficiary, the rules get more complex still, and often benefit from professional guidance.
Because the rules depend on several specific facts about you and about the person you inherited from — and because getting a required distribution wrong can mean a real tax penalty — this is one of the areas where general information can only take you so far.
Call (832) 536-8693 to talk through your specific situation with a licensed advisor, at no cost and no obligation.
A short, free conversation can help you understand what applies to your situation before any deadline sneaks up on you.
Free — no obligation, no pressure.