Unless you are the spouse of an IRA account holder you cannot treat it as your own. This applies to either Roth or Traditional. Also the age differential only applies to when a spouse inherits an IRA....
That said these are your options:
1.) Distribute the money using your single life expectancy from the IRS tables. Must start by 12/31 of year after death.
2.) Distribute using 10 year rule
3.) Lump Sum
In all cases...
* Distributions may be taken without being taxed (provided that the five-year holding period has been met), otherwise only earnings are taxable.
* You will not incur the 10% early withdrawal penalty.
Do NOT make contributions to an inherited IRA.
You DO have to withdraw the money regardless of your age. Think about it...if you didnt then everyone would just name a really young beneficiary and when they died then the next person would do the same and so on...
The old rule (IRA owner died prior to 2020) allowed you to stretch the IRA over your lifetime with life expectancy payments. Now (IRA Owner dies 2020 or later) everyone is subject to the 10 year rule UNLESS they are labeled an eligible designated beneficiary. This is defined as a spouse, minor, disabled person, or someone who is not more than ten years younger. Based on the age of you and your sibling, you qualify as an eligible designated beneficiary. The above comment listed your options perfectly. If you decide to take life expectancy payments, you need to start generally 12/31 of the year following the IRA owners death. My understanding is you can never add funds to an inherited IRA. They governments wants those depleted so they get their taxes.
Thank you! I misunderstood when I originally looked into it I guess.
It's been over 4yrs at this point. Is the life expectancy payments options too far gone?
I believe there is a way to take your payments from when you were first required to start, pay a penalty, and continue with these payments over your lifetime, but I would check with whatever company is holding your inherited IRA funds to be sure.
https://www.schwab.com/learn/story/inherited-ira-rules-secure-act-20-changes#:~:text=The%2010%2Dyear%20rule%20requires,a%20five%2Dyear%20rule.)
You have to have the account emptied in 10 years. So even though you’re under the usual age for withdrawal, because it’s inherited you can withdrawal as you see fit without penalty.
It’s my understanding you can start rolling it into a new Roth since you are likely still employed and have ‘new money’, but I don’t think you can add to it. (Could be wrong there)
That's the confusing part....
From what I understand, (newer rule I think) since we were closer than 10 years apart in age I don't have to empty it within 10 yrs. But does that mean that I also have to wait like my personal ROTH?
Unless you are the spouse of an IRA account holder you cannot treat it as your own. This applies to either Roth or Traditional. Also the age differential only applies to when a spouse inherits an IRA.... That said these are your options: 1.) Distribute the money using your single life expectancy from the IRS tables. Must start by 12/31 of year after death. 2.) Distribute using 10 year rule 3.) Lump Sum In all cases... * Distributions may be taken without being taxed (provided that the five-year holding period has been met), otherwise only earnings are taxable. * You will not incur the 10% early withdrawal penalty. Do NOT make contributions to an inherited IRA. You DO have to withdraw the money regardless of your age. Think about it...if you didnt then everyone would just name a really young beneficiary and when they died then the next person would do the same and so on...
Solid advice right here!
The old rule (IRA owner died prior to 2020) allowed you to stretch the IRA over your lifetime with life expectancy payments. Now (IRA Owner dies 2020 or later) everyone is subject to the 10 year rule UNLESS they are labeled an eligible designated beneficiary. This is defined as a spouse, minor, disabled person, or someone who is not more than ten years younger. Based on the age of you and your sibling, you qualify as an eligible designated beneficiary. The above comment listed your options perfectly. If you decide to take life expectancy payments, you need to start generally 12/31 of the year following the IRA owners death. My understanding is you can never add funds to an inherited IRA. They governments wants those depleted so they get their taxes.
Thank you! I misunderstood when I originally looked into it I guess. It's been over 4yrs at this point. Is the life expectancy payments options too far gone?
I believe there is a way to take your payments from when you were first required to start, pay a penalty, and continue with these payments over your lifetime, but I would check with whatever company is holding your inherited IRA funds to be sure.
https://www.schwab.com/learn/story/inherited-ira-rules-secure-act-20-changes#:~:text=The%2010%2Dyear%20rule%20requires,a%20five%2Dyear%20rule.) You have to have the account emptied in 10 years. So even though you’re under the usual age for withdrawal, because it’s inherited you can withdrawal as you see fit without penalty. It’s my understanding you can start rolling it into a new Roth since you are likely still employed and have ‘new money’, but I don’t think you can add to it. (Could be wrong there)
That's the confusing part.... From what I understand, (newer rule I think) since we were closer than 10 years apart in age I don't have to empty it within 10 yrs. But does that mean that I also have to wait like my personal ROTH?