Here is the copilot output:
Yes, inherited IRA balances are subject to special rules that depend on several factors, including the type of IRA, the beneficiary’s relationship to the original account holder, and when the account holder died. Here’s a breakdown:
Key Inheritance Rules for IRA Balances
1. Spouse vs. Non-Spouse Beneficiaries
• Spouse beneficiaries have the most flexibility:• Can treat the inherited IRA as their own.
• Can delay required minimum distributions (RMDs) until age 73 (or 75 depending on birth year).
• Can roll the IRA into their own IRA or keep it as an inherited IRA.
• Non-spouse beneficiaries face stricter rules:• Must open an inherited IRA.
• Generally must withdraw the entire balance within 10 years if the original owner died in 2020 or later (due to the SECURE Act) A B.
• May be subject to annual RMDs depending on the beneficiary’s age and the original owner’s age at death C.
2. Type of IRA Matters
• Traditional IRA:• Withdrawals are taxable.
• RMDs apply based on the beneficiary’s life expectancy or the 10-year rule.
• Roth IRA:• Withdrawals of contributions are tax-free.
• Earnings are tax-free if the account was open for at least 5 years.
• No RMDs for spouse beneficiaries; non-spouse beneficiaries must follow the 10-year rule A.
3. Multiple Beneficiaries
• The IRA can be split into separate inherited IRAs for each beneficiary.
• Each beneficiary then follows their own timeline and rules for distributions A.
4. Death Timing Affects Rules
• If the original owner died before 2020, older rules may apply (e.g., life expectancy method).
• If the death occurred after 2019, the SECURE Act mandates the 10-year rule for most non-spouse beneficiaries C.
Would you like help modeling how these rules apply to a specific scenario—like a Roth IRA inherited by a sibling or a traditional IRA split among children?
