Heirs Get More Time to Keep Their Money in Inherited Retirement Accounts

[nitpicked]

4. But- should they??

No matter what age beneficiaries are, the shorter the timespan for withdrawing the inherited IRA funds, the greater the likelihood that, if the IRA is large enough, it will cause a move to a higher tax bracket in one or more withdrawal y.ears.

There can be more issues for older persons. Let's take a 67 year-old new Federal retiree, non-spouse beneficiary of someone who died in 2023. He saved under both traditional and Roth IRAs, and the Thrift Savings Plan (traditional). Is it best to take the 10 years to finish withdrawing money from the inherited IRA?

Maybe not. In 2030, he will be 73 and must take 2 required distributions from both the traditional IRA and TSP. If he invested in TSP's C fund, he could be one of those TSP millionaires, or maybe a bit less. To round this, $810000/27= $30000 RMD a year to withdraw. Add the IRA RMD, plus SS and the federal pension, and annual income could push into the next tax bracket, especially if also withdrawing inherited IRA money.

New Federal retirees have to enroll in Medicare A&B. Higher incomes may lead to higher Medicare premiums two years later.

Especially if you are older, get advice first.