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.