08 Oct How should I take payouts from my deceased brother’s 401(k)?

Q. I am the named beneficiary for my brother’s annuity/401(k). He died in February. His union said I must roll it over into an inherited IRA. I’m told the law changed in December 2019 and I should roll it into a beneficiary IRA. What’s the best way to take the payouts?
— Unsure

A. We’re sorry for the loss of your brother.

An inherited IRA and a beneficiary IRA are the same thing.

But those who told you about the law change — The Secure Act — are correct, said Bill Connington of Connington Wealth Management in Paramus.

It used to be that non-spouse beneficiaries could stretch out Required Minimum Distributions from an inherited IRA over their lifetimes.

But now, non-spouse beneficiaries must now take the funds out within 10 years, he said.

Beneficiaries don’t have to take funds out every year, but instead, they can determine the best time to take them based on their tax situation over the 10-year period.

You should speak to your advisors to choose the best strategy for you based on your overall situation.

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This story was originally published on Oct. 8, 2020.

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