It’s not always easy to stretch a buck. If you inherit an IRA account, you may be able to stretch your payments out over the course of your lifetime. With adequate assets, proper planning and just a little luck, so can your beneficiary at your death.
The whole process starts with your decedent’s beneficiary form. If anyone other than the decedent’s spouse inherits the account, they are legally required to begin taking distributions by December 31 of the year following the death. The beneficiary retains the right to withdraw funds over the course of their lifetimes.
If you are the holder of a current IRA, your account has been able to grow tax free since it was established. This can continue unabated until your spouse or other beneficiary dies or fully depletes the account. Normally when you are closing an IRA account, you can redeposit funds in another IRA within 60 days at no penalty. When you are the heir to such an account, the process will not be as simple if you are choosing to stretch payments over your lifetime.
Proper titling of the account is paramount. This is one of the most detailed areas of tax law. You only have one chance to get it right and there are no do overs. Estate planning attorneys are best suited to insure the success of the stretched IRA for the next generation and perhaps beyond.