How should I take distributions from these inherited IRAs?


Q. My dad passed in 2017, leaving my mom his IRAs. My mom passed in December 2020. In October 2020, the Social Security Administration awarded me an Eligible Disabled Beneficiary (EDB) as of June 2021. Being a beneficiary of my mom’s inherited IRAs, they might be governed by the SECURE Act and I’d have to take the money out in 10 years. But I think my EDB status means I can spread out the distributions from the traditional IRA over my lifetime but the Roth would be governed by the 10-year rule. Is that correct?
— Beneficiary

A. We’re sorry to hear about the loss of your parents.

The SECURE Act, which stands for the Setting Every Community Up for Retirement Act, was signed into law on December 20, 2019.

It made some significant changes to how inherited IRAs work.

The law requires most non-spouses who inherit retirement accounts such as IRAs and 401(k)s after 2019 to withdraw all of the funds in the account within 10 years, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

But it permits certain disabled individuals to qualify for the life expectancy payout afforded to certain individuals under the old law and to spouses under the SECURE Act, she said.

As you noted, EDB stands for Eligible Designated Beneficiary and refers to certain individuals who can preserve the life expectancy option.

“The definition of a disabled person under the SECURE Act is the same definition as used to determine eligibility for Social Security disability benefits,” Whitenack said. “Therefore, a person who receives SSI or SSDI benefits from the Social Security Administration should also be able to take the life expectancy option.”

But, she said, people who receive means-tested benefits such as SSI or Medicaid may be disqualified from receiving the benefits until the inherited assets are spent down to the asset limit set for the benefits — unless the inherited IRA account is paid to a properly drafted special needs trust.

An eligible designated beneficiary who inherits a Roth IRA can also preserve the stretch option, she said.

You should speak to a professional who can help you determine how you should proceed.

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This story was originally published on Jan. 25, 2022. 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.