30 Nov I have an inherited IRA. How soon do I have to take distributions?

Q. I have an inherited IRA and was told that I have 10 years to withdraw the funds and do not need to take annual distributions. Then I read that the IRS said that you must take annual distributions in years one through nine, and any balance in the account in the tenth year. Which is correct?
— Beneficiary

A. It all depends on the timing of when you received the inherited IRA.

The law changed in recent years, and there was some confusion about how it would work

If your inherited IRA falls under the 10-year rule, the IRS clarified the rule in Publication 590-B, said James Suazo, a chartered financial consultant with Baron Financial Group in Fair Lawn.

If the deceased passed on or before December 31, 2019, the 10-year rule does not apply.

“The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments to withdraw the entire balance of the IRA by December 31 of the year containing the tenth anniversary of the owner’s death,” according to the IRS publication on the topic.

Suazo offered this example: If the owner died in 2020, the beneficiary would have to fully distribute the plan by December 31, 2030. The beneficiary is allowed, but not required, to take distributions in years one through nine, but the full amount is required to be distributed within the tenth year, he said.

Suazo recommends you coordinate with an accountant to determine the best distribution strategy for your specific situation.

Email your questions to .

This story was originally published on Nov. 30, 2021.

NJMoneyHelp.com 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.