Inherited IRAs- when does everything have to be distributed

Submitted by Robert Roselli on Wed, 2020-08-19 18:50

I have a client whose brother passed away on 01/01/2020. He had an IRA and a 401K.

1) IRA already passed to his brother. I know the 10-year rule. When is the deadline to distribute all funds? Is it 12/31/2030 or 12/31/2031?
2) His brother had a 401K with no beneficiary. It’s going to an Inherited IRA in the name of his estate. I believe all funds need to be distributed in 5 years. is the deadline 12/31/2025 or 12/31/2026?



Submitted by Alan - IRA critic on Wed, 2020-08-19 19:35

  1. 12/31/2030
  2. If his estate is the beneficiary, the 401k balance is not eligible to be rolled over to an inherited IRA per Sec 402(c) (11). In this situation almost all 401k plans will require that a lump sum distribution be made. For the few that are willing to continue the inherited 401k, the 5 year rule applies if brother passed prior to his RBD, or if brother passed on or after the RBD, annual RMDs can be made over brother’s remaining life expectancy. The Secure Act does not alter RMDs for non designated beneficiaries.

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