Have an inherited IRA or have one you plan to pass down?

When dealing with the transfer of ownership of IRAs, there is a 10 year clean out requirement, stating that the funds must be distributed within 10 years after the death of the original account owner; this applies to many IRAs inherited after 2019. So, if an IRA owner dies in August of 2024 the beneficiary must clean out the IRA  no later than Dec. 31. 2034. 

Beneficiaries that are by designation eligible, may be exempt from the 10-Year rule. Beneficiaries that this may apply to are surviving spouses, minor children (Until age 21), the chronically ill or disabled, or people who are not more than 10 years younger than the decedent. Even while being exempt from the conditions they may still do a stretch IRA. The same goes for any individuals who inherited an IRA before 2020. 

In addition to the previous terms, beneficiaries categorized as  “Surviving spouse” also have the option to take their newly inherited IRA as their own.