If you’ve inherited an IRA, you need to know about these new final IRS regulations
A tax law change in 2019 essentially ended “stretch IRAs” by requiring most beneficiaries of inherited IRAs (other than a spouse) to withdraw all of the funds within 10 years. Since then, there’s been confusion surrounding inherited IRAs and the so called “10-year rule” for required minimum distributions (RMDs). That is, until now. The IRS has issued final regulations relevant to taxpayers who are subject to the “10-year rule” for RMDs from inherited IRAs or defined contribution plans, such as 401(k) plans. In a nutshell, the final regs largely adopt proposed regs issued in 2022. 2022 proposed regs sowed confusion Under the Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law in 2019, most heirs other than surviving spouses must withdraw the entire balance of an inherited IRA or defined contribution plan within 10 years of the original account owner’s death. In February 2022, the IRS issued proposed regs that came with an unwelcome surprise for many...