12 Apr Can I do anything to prolong withdrawals from inherited IRA?

Q. I just inherited an IRA from my uncle. I didn’t know the law had changed so I have to take out the money in 10 years. I was hoping to only take out the minimum until my own retirement. Is there any way around this? And what can I do to set up my IRAs so my kids, eventually, won’t have to take it all out at once?
— Unhappy about it

A. We’re sorry to hear about your uncle.

Let’s go over how this works.

The SECURE Act, which was enacted in 2019, changed the rules for inherited IRAs, said Tom Szieber, a trusts and estates attorney at Avelino Law in Summit.

Unfortunately, there is not much a person can do about the requirement to withdraw the balance of the inherited IRA within 10 years, Szieber said.

Among the changes brought by the new law is the requirement that an IRA beneficiary withdraw the balance of the IRA within 10 years rather than over the course of his or her life, unless the beneficiary is a “designated beneficiary.”

Those beneficiaries are a surviving spouse, a minor child of the participant, a disabled or chronically ill person or a person less than 10 years younger than the participant, he said.

“This rule is pretty cut and dry, so if one does not qualify as a `designated beneficiary’ — it is unclear whether you do based on the details provided — then he or she cannot dodge the 10-year payout rule,” he said.

Regarding your own children, Szieber said you would be wise to consult an experienced estate planning attorney because the answer to that portion of your question has a number of variables.

“Without knowing the ages and health of you and your children, whether each of you are married, and a variety of other estate planning considerations, it is difficult to determine the best method of leaving the IRAs to your children,” he said. “However, it is worth mentioning that they won’t have to take it out `all at once,’ as they, too, would have a 10-year window within which they may withdraw the balance of your own IRAs.”

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This story was originally published on April 12, 2023.

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.