Learned something new today about Inherited IRAs

seadoug

seadoug

Well-known Member
Location
Texas
My mother passed away in 2021 at 89 y/o and she had been taking required minimum distributions from her IRA for many years. Her IRA is now part of my portfolio. I've not had to do the same because I'm only 68, but my financial advisor called today to say the tax laws have changed for 2025 and required minimum distributions, which are taxable events, now have to be taken from inherited IRAs regardless of age. I can't complain because I feel fortunate to have inherited her IRA to supplement my own IRA and 401k. I just hate paying extra taxes when we are both retired and only have an income stream from our investments. Not sure if anyone else here inherited an IRA from a parent but, if so, these are the new rules.
 

OneEyedDiva said:
I didn't inherit an IRA, but have kept up with the rules so that I could advise my son who, God willing, will inherit mine. I'm surprised your advisor is just telling you about this. Check out this information about inherited IRA rules since 2019 and going forward.
https://search.brave.com/search?q=2024+inherited+ira+laws&source=desktop&summary=1&conversation=4bbcce53c19b14cf773b18
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Wow, finalized in July 2024? I'm surprised he just reached out to me as well. I'll give him a pass since he has handled my investments well. I KNEW you would be on top of this!
 

seadoug said:
My mother passed away in 2021 at 89 y/o and she had been taking required minimum distributions from her IRA for many years. Her IRA is now part of my portfolio. I've not had to do the same because I'm only 68, but my financial advisor called today to say the tax laws have changed for 2025 and required minimum distributions, which are taxable events, now have to be taken from inherited IRAs regardless of age. I can't complain because I feel fortunate to have inherited her IRA to supplement my own IRA and 401k. I just hate paying extra taxes when we are both retired and only have an income stream from our investments. Not sure if anyone else here inherited an IRA from a parent but, if so, these are the new rules.
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I bet you a good % of people on this board wished your problem was their problem.
 
@seadoug …the penalty for not taking the distribution is stiff. Make sure you haven’t missed any required distributions and get a game plan. My SO has had to take distributions for years now…and he will not be 65 till this year. Good luck…
 
I didn't know there was a recent change in requirements. My cousin is named as beneficiary on my IRAs. It is my understanding that if the original owner had already begun RMD distributions, the beneficiary would be subject to the 10-year rule, meaning he must also take annual distributions, and the full account must be withdrawn by the end of the 10th year. Any amount remaining in the account at the end of the 10 years is subject to a 50% penalty.
 

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