Inheriting an Inherited IRA in 2021
We recently had a client pass away (2021) that had an inherited IRA from her father back in 2003. Her adult children are the beneficiaries. I have received contradictory answers as to whether or not they can stretch the inherited IRA for ten years or if they have to take a lump sum due to the Secure Act. Can someone help clear up the matter. Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2021-11-08 19:31
Her children are subject to the 10 year rule, which has no annual RMDs, but the inherited IRAs for each must be drained by 12/31/2031. However, if client did not complete her 2021 RMD, the children must complete it in any combination they wish. If the current custodian is referring to a lump sum distribution, that is not an IRS requirement, but possibly could be a custodian anti consumer requirement. If a custodian requirement, the children could transfer the inherited IRA to a new custodian who does not have the lump sum requirement.