Did you acquire an IRA from someone other than your spouse? This occurrence is not uncommon.

If you find yourself in this situation, exercise caution as making a misstep can lead to severe consequences for non-spouse beneficiaries. Therefore, it is crucial to proceed thoughtfully and ensure that you handle the situation correctly. Initiate the process by reaching out to the IRA custodian to confirm that the account is appropriately designated as an inherited IRA. Subsequently, carefully examine the available options for non-spouse beneficiaries inheriting an IRA – If you need suggestions for this, please, reach out to NFI Solutions for suggestions.

In light of the SECURE Act, the “stretch” IRA option is no longer available to most non-spouse beneficiaries. This option is now exclusive to eligible designated beneficiaries, otherwise known as EDBs, which include disabled and chronically ill individuals, minor children of the IRA owner, and beneficiaries not more than 10 years younger than the IRA owner. Non-spouse beneficiaries who do not fall under the EDB category are not obligated to take a lump sum distribution. They generally have the option to spread distributions from the inherited IRA over a 10-year payout period.

Annual required minimum distributions may be necessary during this period if the original IRA owner passed away on or after their required beginning date. Notably, the IRS has waived these payments within the 10-year period for the years 2021, 2022, and 2023 due to ongoing confusion over the rules. When inheriting an IRA as a non-spouse, exercise extra caution and refrain from making hasty decisions. Understanding all available options is crucial, and careful consideration is advised before taking any action. Unlike spouse beneficiaries, non-spouse beneficiaries lack the option to roll over an unwanted distribution. While non-spouse beneficiaries can transfer an inherited IRA to a new custodian, this must be accomplished through a direct trustee-to-trustee transfer.

Contact NFI Solutions for carriers that DO allow stretch and inherited IRAs! We have Solutions for you!