What are the rules when a spouse inherits an IRA?

If a surviving spouse receives a distribution from his or her deceased spouse’s IRA, it can be rolled over into an IRA of the surviving spouse within the 60-day time limit, as long as the distribution is not a required distribution, even if the surviving spouse is not the sole beneficiary of his or her deceased …

Does the 10-year rule apply to spousal inherited IRA?

Under the new regulations, if you inherited a traditional IRA from someone who had already passed their required beginning date and had been taking out payments (required minimum distributions/RMDs), you can’t wait until year 10 to take out the money out.

Does the 10-year rule apply to spouses?

Just like any other individual beneficiary of an owner who dies before the required beginning date, your surviving spouse must start taking distributions in 2022 based on his or her life expectancy (or elect to fully distribute the account under the 10-year rule by the end of 2031).

Does an inherited IRA have to be distributed in 5 years?

The 5-year rule applies to taking distributions from an inherited IRA. To withdraw earnings from an inherited IRA, the account must have been opened for a minimum of five years at the time of death of the original account holder.

Who is exempt from the 10-year rule when inheriting an IRA?

Exceptions to the 10-year rule include payments made to an eligible designated beneficiary (a surviving spouse, a minor child of the account owner, a disabled or chronically ill beneficiary, and a beneficiary who is not more than 10 years younger than the original IRA owner or 401(k) participant).

What is the SECURE Act 10-year rule?

For many individuals, the most significant change made by the SECURE Act was the introduction of the 10-Year Rule. Under the rule, most non-spouse beneficiaries are required to distribute the entirety of their inherited retirement account by the end of the tenth year after the decedent’s death.

How does the 10-year rule work?

Under this rule, once lifetime RMDs begin, they must continue for beneficiaries based on their life expectancy, if they are a designated beneficiary. 2. The 10-year rule, under which all funds in the inherited IRA must be withdrawn by the end of the 10th year after death.

Are RMDs required for non spousal inherited IRAs in 2021?

The IRS generally requires nonspouse inherited IRA owners to start taking required minimum distributions (RMDs) no later than December 31 in the year following the death of the original account owner.

How do I avoid tax on an inherited IRA?

Funds withdrawn from an inherited Roth IRA are generally tax-free if they are considered qualified distributions. That means the funds have been in the account for at least five years, including the time the original owner of the account was alive.