Must I sell stock for inherited IRA distribution with SECURE Act?


Q. The new 2020 SECURE Act requires that inherited IRAs must be distributed within 10 years. Do the securities within the IRA have to be sold in order to comply with the distribution requirement or can the securities be held indefinitely?
— Investor

A. There have been a lot of questions about how the SECURE Act affects inherited IRAs.

The law made some big changes.

And with the giant market downturn, we understand why you may not want to sell stocks that took a big hit.

As you noted, funds must be withdrawn from the account in the 10-year distribution window.

This is typically done as cash, said Nicholas Scheibner, a certified financial planner with Baron Financial Group in Fair Lawn.

But your custodian — the company that holds the IRA — may allow beneficiaries to transfer the securities to a non-qualified account, Scheibner.

However, the taxes withheld must be paid in cash, he said.

“Since an IRA is a tax-deferred account, you do not have to worry about the tax consequence of buying or selling the securities within that fund,” he said. “Any gains or losses are not realized within an IRA.”

That’s different from a regular brokerage account, where securities do not have to be sold, and would receive a “step-up” in cost basis upon your death.

“Keep in mind that your advisor and/or custodian may charge a fee for the sale of the stocks,” he said. “If there are transaction fees, your beneficiaries may wish to hold the securities so they may seek other avenues with lower or zero commissions.”

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This story was originally published on March 23, 2020. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.