If you’ve postponed taking required distributions from an inherited IRA, mark your calendar. There’s a good chance you’ll need to start taking withdrawals from your account next year to avoid a hefty penalty from the IRS.
Beneficiaries of traditional IRAs have always had to pay taxes on withdrawals from inherited accounts, but before 2020, they could minimize the tax bill by extending withdrawals over their life expectancy. The Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was signed into law in 2019, put an end to this tax-saving strategy for most adult children, grandchildren and other non-spouse heirs who inherit a traditional IRA from someone who died on or after January 1, 2020.
