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October 13, 2012

Year-End IRA Tip: Inherited Retirement Account Deadline

If you Inherited A Retirement Account Five Years Ago…
If you inherited a retirement account five years age and you are subject to the five year rule, you must withdraw the entire balance by December 31 of this year. Any amount remaining in the account after December 31 will be subject to the 50% excess accumulation penalty.
If You Inherited a Qualified Plan Account Last Year and the Five Year Rule Applies
If you inherited assets under a qualified plan, 403(b) plan or a governmental 457(b) plan, and the plan only allows you to distribute the assets under the five year rule, you can avoid that limitation by rolling over those assets to an inherited IRA which permits distributions under the life-expectancy rule. However, if for example you inherited the assets last year, the rollover must be completed by December 31 of this year in order for you to benefit from the life-expectancy provision.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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