Tax Planning: Minimizing Taxes on Inherited IRA Distributions

To clarify the inherited IRA distribution requirements that were first laid out in the 2019 SECURE Act, the IRS issued proposed regulations in 2021 that impacted IRA beneficiaries. While investors and wealth owners may perceive the taxes they’ll incur as unfavorable due to the requirement of minimum distributions, the new regulations may benefit investors by enabling them to spread income over multiple years. This paper, with a case study, examines the tax consequences of different withdrawal strategies.