As we get older, it is likely that we might inherit an IRA from mom or dad – or we need to counsel mom or dad as they inherit an IRA after one of them dies. The rules are different in each scenario and due to the passage of the SECURE Act, the rules have changed.
Thankfully, the Internal Revenue Service succinctly explains the choices one has on how to treat an inherited IRA. Here are the choices, copied (not summarized) directly from the IRS website:
“A beneficiary can be any person or entity the owner chooses to receive the benefits of a retirement account or an IRA after he or she dies. Beneficiaries of a retirement account or traditional IRA must include in their gross income any taxable distributions they receive."