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Craig Lundquist, MBA, ChFC®, CRPC®
VP of Wealth Management
651-773-2757
Kristin Becker
Senior Administrative Assistant
651-773-2821
Ideal Wealth Advisors
Located at Ideal Credit Union
8499 Tamarack Road
Woodbury, MN 55125
CRPC conferred by College for Financial Planning
July/August 2025
Inherited IRAs: What You Need to Know
Have you inherited or expect to inherit an IRA in the future? If so, here are some key questions and answers regarding inherited IRAs in 2025.
Can Inherited IRAs Come From Any IRA?
Yes, they can come from traditional IRAs, Roth IRAs, or other retirement accounts.What's New for 2025?
The SECURE Act 2.0 has modified distributions for beneficiaries. One critical change is that most non-spousal beneficiaries must withdraw all funds from an inherited account within 10 years. This reset impacts how you strategize the taxable implications of those withdrawls, especially if you expect to inherit a substanial amount.EXCEPTIONS TO THE 10-YEAR RULE
Surviving spouses, minor children, disabled individuals, and those not more than 10 years younger than the deceased can take distributions over their life expectancy instead of the 10-year rule.
Surviving spouses, minor children, disabled individuals, and those not more than 10 years younger than the deceased can take distributions over their life expectancy instead of the 10-year rule.
What Should I Consider When Inheriting an IRA?
When you inherit an IRA, consider the tax implications carefully. The type of account (traditional versus Roth) will affect how distributions are taxed. For traditional IRAs, withdrawals are taxed as ordinary income, whereas Roth IRAs are tax-free if the account has been open for over five years. Consulting with a financial professional could also help you create strategies that align with your wealth management goals.How Do I Manage My Inherited IRA?
Managing an inherited IRA involves being aware of and adhering to the required distribution rules. Given the limitations of the10-year rule, consider when and how much you take out to avoid tax hits. This could mean liquidating some assets strategically to minimize tax burdens. Regular communication with a financial or tax professional is key to navigating potential financial pitfalls.
Can I Convert an Inherited Traditional IRA to a Roth IRA?
While you can convert an inherited traditional IRA to a Roth IRA, understand that this would trigger a tax event since those funds will be treated as taxable income. High-net-worth individuals could consider this route if they believe they can offset the tax hit with deductions or if they expect their tax bracket to decrease in the future.The new rules have dramatically changed the landscape. Stay proactive, consult with your trusted professional, and plan
thoughtfully.
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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Ideal Credit Union and Ideal Wealth Advisors are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Ideal Wealth Advisors, and may also be employees of Ideal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of Ideal Credit Union or Ideal Wealth Advisors. Securities and insurance offered through LPL or its affiliates are:
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