Distributions in the life expectancy method begin no later than the end of the year the late asset holder would have reached the age of 70 ½. Open an inherited IRA and use either the life expectancy method or the five year method - With either of these methods, you will transfer the assets into an inherited IRA in your name. Inherited IRAs can have beneficiaries that are spouses or non-spouses, but it's important to understand the differences in order to avoid paying extra costs. The SECURE Act, which will become effective January 1, 2020, could more appropriately be called the Extreme Death-Tax for IRA and Retirement Plan Owners Act. IRA owner dies on or after required beginning date: Spouse may treat as his/her own, or Distribute over spouse’s life using Table I* Use spouse’s current age each year, or Distribute based on owner’s age using Table I Use owner’s age as of birthday in year of death Reduce beginning life expectancy by 1 for each subsequent year RMD Rules for Inherited IRAs. Special rules exist for spouses & other beneficiaries. Rules vary, depending on whether you inherit an IRA from a spouse or non-spouse. IRA … Get the facts about Inherited IRA withdrawal rules and distributions. "What now?" After the 10th year, any funds left in the account must be taken out and the account closed, regardless of the tax consequences. From a relationship standpoint, there are two categories of inherited IRAs, each governed by a set of special rules. Under the old inherited IRA rules there was less urgency for immediate tax planning because the non-spouse beneficiaries just had to move the money into an inherited IRA the year after the decedent passed away and in most cases the RMD’s were relatively small resulting in a minimal tax impact. The CARES act temporarily waives RMDs for all types of retirement plans for calendar year 2020. Under the new rules, beneficiaries of inherited IRAs must now withdraw all the money in their inherited accounts within 10 years of receiving it — they can no longer take smaller distributions to stretch their savings over their life expectancy. An inherited IRA is an account opened for someone inherits an IRA or retirement plan from a deceased owner. If you've inherited an IRA, learn about the required minimum distributions (RMDs) you may need to take soon, as well as how RMDs work in the long run.