From 24/7 Wall St. · David Beren · · 1m 30s
Siblings Inherit Same IRA, Different Rules
Two siblings inherit identical $200,000 IRAs from same sister who died at 65. One must empty it in 10 years, the other stretches withdrawals decades.
In brief
Two siblings inherit identical $200,000 IRAs from same sister who died at 65. One must empty it in 10 years, the other stretches withdrawals decades. A 61-year-old sister inherits a $200,000 IRA from her sister who died at 65, while her 48-year-old brother inherits the same amount but must drain it within 10 years…
Inherited IRAs
Two siblings inherit identical $200,000 traditional IRAs from same sister who died at 65.
Age-Based Rule
The 61-year-old sister can spread withdrawals across her life expectancy, but the 48-year-old brother must drain the account within 10 years.
SECURE Act Rule
The SECURE Act of 2019 ended stretch IRA for non-spouse beneficiaries, requiring emptying within 10 years unless eligible.
Eligible Beneficiaries
Five categories qualify: surviving spouse, minor child, disabled individual, chronically ill person, or beneficiary under 10 years younger than decedent.
Siblings Rule
The deceased sister was 65. Her 61-year-old sister is four years younger and qualifies, but her 48-year-old brother is 17 years younger and does not.
Tax Impact
The 48-year-old brother faces higher federal tax brackets and IRMAA surcharges during peak earning years from draining $200,000 over a decade.
Edge Cases
Minor children get life expectancy treatment until age 18, disabled or chronically ill beneficiaries keep stretch, and non-spouse beneficiaries face 25% penalty for missed distributions.
Beneficiary Review
Account owners should review beneficiary designations to ensure no heirs are more than 10 years younger than the decedent.
The bottom line
A 61-year-old sister inherits a $200,000 IRA from her sister who died at 65, while her 48-year-old brother inherits the same amount but must drain it within 10 years.
