What are the rules for a beneficiary that inherits an individual retirement account?
The core tax situation is the same as it would be for the original account holder. The beneficiary of a traditional account would have to pay taxes on the income, but this is not the case for a Roth beneficiary.
When the SECURE Act became law in December of 2019, a major change was implemented that is not positive from an estate planning perspective. As it stands now, a non-spouse beneficiary of an IRA must take ownership of all assets in the account within 10 years of the passing of the original account holder.
Previously, the beneficiary could stretch out the payments over any length of time, and this approach provided significant tax benefits.