Inherited individual retirement accounts can be a financial boost for heirs, but the windfall can trigger tax issues, experts say.
Withdrawals from pretax inherited IRAs incur regular income taxes.
Since 2020, certain heirs can no longer "stretch" retirement account distributions over their lifetime to reduce yearly taxes.
Now, certain heirs, including most adult children, must deplete inherited accounts within 10 years, known as the "10-year rule."
While only about 20% of May's clients have inherited IRAs, she expects more heirs to face the tax-planning issue as baby boomers age.
Persons:
IRAs, Ed Slott, Roth, Slott, JoAnn May
Organizations:
Finance, IRS, Asset Management
Locations:
Berwyn , Illinois