I inherited an IRA from a parent in 2021 and I’m confused about the rules regarding taking withdrawals. Do I have to take a Required Minimum Distribution and how often?
The IRS says that when death occurs on or after the account holder’s “required beginning date” (usually at age 72), the non-spouse beneficiary has 10 years to take a full distribution of the inherited IRA (or qualified plan). The IRS changed the rules surrounding non-spouse beneficiaries with the SECURE Act passed in 2019, eliminating the so-called “stretch IRA”. You can take the withdrawals in a series of withdrawals or a lump sum at the beginning or end of the period, so you have some flexibility. Main point here is that the account should be distributed in full by the end of 10 years of the inheritance. If you have inherited a Roth IRA, the same rules apply (10 years for full withdrawal). None of the gains or distributions are taxable.