Do inherited IRA rules force me to sell investments right away?

No. You can usually keep investments inside the inherited IRA while meeting required withdrawals. You must still empty the account by December 31 of year 10 for most beneficiaries, and take annual RMDs if the decedent died after starting RMDs. Coordinate trades and withdrawals to manage taxes and market risk.

What happens if I miss a withdrawal under the 10-year rule RMDs?

A missed required withdrawal can trigger an IRS 25% penalty on the shortfall. Correct the miss within two tax years and file Form 5329 to request a reduced 10% rate. Keep proof of the corrective distribution and your RMD calculation. Set reminders to avoid future lapses.

How is Roth IRA inheritance treated for beneficiaries?

Most beneficiaries must empty a Roth IRA by year 10, but there are no annual RMDs because the owner had no required beginning date. Distributions are generally tax-free if the five-year clock is met. If not, the earnings portion can be taxable. Spouses have extra options, including treating it as their own.

Who counts as an eligible designated beneficiary with slower payouts?

Eligible designated beneficiaries include a surviving spouse, a minor child of the decedent until age 21, a disabled or chronically ill person, and someone not more than 10 years younger than the decedent. These beneficiaries may use life expectancy payouts, but many switch to the 10-year rule at a defined point.

How can Singapore-based heirs avoid the IRS 25% penalty?

Set a dated plan for annual withdrawals and the year-10 deadline. Confirm whether annual RMDs apply. If you miss one, make a corrective distribution quickly and file Form 5329 to seek the reduced 10% rate. Keep custodian statements, 1099-R or 1042-S forms, and explanations for your records.

Global Market Insights

Inherited IRA Rules: 10-Year Clock, 25% Penalty — February 20

ByHuzaifa Zahoor February 20, 2026February 20, 2026

Inherited IRA rules now apply in full. Most non-spouse heirs must empty accounts within 10 years. If the original owner had started RMDs, heirs also need annual withdrawals. Missing one can trigger a 25% excise tax, reduced to 10% if fixed within two years using Form 5329. For readers in Singapore with US ties, timing matters. We should map distributions, consider Roth IRA inheritance nuances, and document every step. This guide explains who qualifies for exceptions and how to plan across borders without costly errors.