3 Things You Must Know If You Inherit an IRA

By Sara Brenner, JD
IRA Analyst

IRAs have now been around for decades. This means these accounts are now being inherited by beneficiaries and even, increasingly, by successor beneficiaries. Here are 3 things you must know if you are a successor beneficiary who inherits an inherited IRA:

You can continue the stretch. One of the first questions you may have when you inherit an inherited IRA may be about when distributions are required. You may wonder if you can continue the stretch or maybe even extend the stretch over your own life expectancy. The bad news is that as a successor beneficiary you cannot use your own life expectancy to calculate required minimum distributions (RMDs). The good news, however, is that you can step into the shoes of the original beneficiary and continue on with the stretch that would have been available to him had he lived. This may allow for more years of tax-advantaged growth!

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Q: I have heard conflicting reports. Would the proposed SECURE Act affect Roth IRAs? Or, is the elimination of the stretch only for Traditional IRAs?

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Q: We found a discussion on your website’s discussion board in 2011 regarding 60-day rollovers straddling two calendar years. We are trying to confirm that a rollover would still be valid even if the Form 1099-R and 5498 may be issued in two different years.

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Q: As I understand it, a contribution would be income tax free when sent directly from an IRA to a 501(c)(3) organization. It is not clear to me if the distributions still will affect my MAGI that in turn will affect Medicare Part B IRMAA premiums.

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