Dealing with the death of a loved one is hard enough, but navigating inherited retirement accounts can add stress. Becka inherited her mom’s IRA, needing to take a $10,000 RMD in 2025, but it’s invested in stocks. The SECURE Act introduced updated rules for IRA distributions, eliminating the “stretch” IRA for non-spouse beneficiaries.

The 10-year period to empty an inherited IRA starts after the original owner’s death. Failure to take an annual RMD can result in a 25% excise tax. Any remaining balance after 10 years faces a 50% penalty. Different options exist for different beneficiaries, such as setting up an inherited IRA or taking a lump-sum distribution.

Inherited Roth IRAs are subject to the 10-year rule, but distributions are tax-free after five years. It’s recommended to spread out distributions over 10 years to reduce tax burdens. Working with a tax professional can help determine the best strategy. Assets inside traditional IRAs only become taxable upon distribution.

In-kind distributions allow for assets like stocks or bonds to be taken out instead of cash. Becka could move higher-growth assets to her account or sell assets to meet distribution requirements. Offloading underperforming funds and rebalancing the account may be options. Rules around inherited IRAs are complex, so consulting with a tax advisor is helpful.

Read more at Yahoo Finance: I inherited my mom’s IRA and must take $10K in 2025 RMDs, but there’s no cash. What should I liquidate?