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Distribution rules vary depending on the nature of the beneficiary.
Why Split an Inherited IRA?
The challenge of inheriting an IRA and splitting it among siblings doesnt usually come at the point of transfer.
Rather, its when the assets are distributed that some problems can arise.
What this means is the money must be withdrawn in full within 10 years.
When you inherit an IRA, you are still responsible forrequired minimum distributionsannually.
The 10-year mandate to completely empty the account is on top of this RMD requirement.
First, youll need documentation on the account showing who the beneficiaries are.
However, there are scenarios in which an inherited IRA can result in relatively severe tax consequences.
One is if you fail to take your required minimum distribution from the inherited IRA every year.
This triggers a stiff 25% penalty of the amount that you should have withdrawn.
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