Good Morning
Good Morning

Ask the Expert: The rules for IRA beneficiaries

My wife's dad passed in September 2014. She inherited a $110,000 IRA, and has been dutifully withdrawing a small percentage based on her life expectancy ever since. Is this necessary? Can she postpone distributions until she wishes and then pay taxes on the withdrawn amount? Can she place the IRA in a will for our children? At that point, am I right that they’d have 10 years under current law to empty the account?

Your wife must continue taking annual required minimum distributions (called RMDs) from an individual retirement account she inherited in 2014 because the account is subject to the rules that apply to retirement accounts that were inherited before 2020.

IRAs don’t pass through wills. She can name the kids as her successor beneficiaries on the IRA’s beneficiary designation form. The account custodian can provide the necessary paperwork.

In most cases, IRA beneficiaries who inherit an account from someone who died after Dec. 31, 2019, no longer have to take yearly distributions; but they must empty the account within 10 years of its original owner's death. By contrast, under the old law that still applies to your wife's inherited IRA, she must take yearly RMDs based on her life expectancy; but by withdrawing no more than RMDs, she can stretch the account's tax-deferred growth over her lifetime, and as a result leave a potentially much larger account to the kids.

The only IRA beneficiaries not subject to the new 10-year post-death payout rule are surviving spouses; minor children (but not grandchildren), up to their age of majority; disabled individuals; individuals who are chronically ill; and beneficiaries not more than 10 years younger than the original account owner (his or her siblings, for example).

The bottom line

The rules governing an inherited IRA depend on the original owner's date of death.

More information

TO ASK THE EXPERT Send questions to Include your name, address and phone numbers. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own consultants for your specific needs.

More Lifestyle