Inherited IRA
I have a IRA owner who recently passed away, the funds are in an annuity which was set up to do the stretch for the
non-spouse beneficiaries. My question with the CARES Act can the beneficiaries still take the IRA proceeds and put the funds into their own inherited IRA without paying taxes all up front? Do they take RMD’s every year based on their age since the account has to be drained in 10 years? Also since some of the non-spouse beneficiaries are under the age of 591/2 will they have to pay the 10 percent penalty of any withdrawals or RMD’s? Thank you
Permalink Submitted by Alan - IRA critic on Wed, 2021-03-03 00:18
With an insurance company held IRA Annuity, there is always a question over contract provisions. However, under IRS rules, it is possible for each beneficiary to create their own inherited IRA Annuity account or perhaps even transfer their interest to a non insuror custodian in a non taxable transfer. The Act you refer to is the Secure Act, which introduced the 10 year rule for most non spouse beneficiaries. Under the 10 year rule, there are no annual RMDs, just a requirement to drain the account by the end of the 10th year. As for the age of the beneficiaries, there is never a 10% penalty on inherited account distributions.