Tax Guy: What to do if you inherit an IRA from someone other than your spouse

In another article, I explained how the IRA required minimum withdrawal rules affect spouses who inherit their husband’s or wife’s IRA. But what if you inherit your Uncle Henry’s IRA, or any IRA that belonged to someone other than your spouse?

Well, the required minimum withdrawal rules in that case are different. And it’s important to understand them, since if you fail to take minimum withdrawals according to IRS guidelines, you can be socked with a penalty equal to 50% of the shortfall. That is one of the harshest penalties in our beloved Internal Revenue Code, your dear departed Uncle Henry didn’t spend all those years saving for that to happen.

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