how ird works for iras and 401 k s
other common examples of ird are distributions from tax deferred qualified retirement plans such as 401 k s and traditional individual retirement accounts iras that are passed on to a beneficiary if an individual dies leaving a 1 million ira to his beneficiary the beneficiary will be responsible for paying taxes on any distributions made from the account 1the beneficiary may have to start taking required minimum distributions rmd s at a certain point a living spouse who is the sole beneficiary has certain rights not granted to another type of beneficiary for example a spouse can rollover the decedent s ira assets into their own ira and postpone rmds until age 73 any beneficiary spouse or otherwise must follow specific rmd rules and is liable for applicable taxes on distributions 14the age for rmds was raised to 72 with the passage of the setting every community up for retirement enhancement secure act in december 2019 then in december 2022 the passage of the secure 2 0 act raised the age to 73 5if the decedent died on or after reaching the age of rmds their rmd for the year of death may factor into their estate for instance if no specific beneficiaries were designated in the account file paperwork for the retirement account where it was held if the amount of the rmd were to push the decedent s estate beyond the federal exclusion an estate tax would kick in the federal exclusion amount for 2024 is 13 61 million 6to try to minimize this impact individuals and married couples employ estate planning strategies that transfer assets to trusts one option is a credit shelter trust which postpones estate taxes until the death of the surviving spouse 