How to Lose an Inherited IRA and Gain a Big Tax Bill

By Sarah Brenner, JD
Director of Retirement Education

Did you inherit an IRA from someone who is NOT your spouse? This is not uncommon. Maybe you inherited from a sibling or a parent or a friend. If this is your situation, proceed with caution! For non-spouse beneficiaries, a wrong move can result in disastrous consequences. So, take your time and do it right.

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Q: We had a client who was 80 years old and still working when he died. He did not own more than 5% of the company. As such, he was not taking required minimum distributions (RMDs) from the plan at his death. Our client named his son as his sole beneficiary. The son would be considered an NEDB (non-eligible designated beneficiary). What are the son's requirements for future RMDs in this situation?

Answer

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