Inheriting an IRA? Advisors warn these 3 costly mistakes could drain far more of your windfall than you expect

Core Insights - The article discusses the significant wealth transfer expected to occur by 2048, with a total of $124 trillion being passed down from the Baby Boomer and Silent Generation to heirs and charities [1] - It highlights the importance of understanding the rules surrounding inherited IRAs, particularly for non-spouse heirs, to avoid costly mistakes [3][4] Group 1: Wealth Transfer Overview - By 2048, Baby Boomers and the Silent Generation are projected to transfer $124 trillion, with charities receiving approximately $18 trillion and Gen X and millennial heirs receiving the remaining $105 trillion [1] - An estimated $54 trillion will be transferred to spouses before reaching the next generation [2] Group 2: IRA Inheritance Rules - The average IRA account balance for Americans aged 61 to 79 is $257,002, indicating that a portion of the wealth transfer will likely come from these accounts [2] - Non-spouse heirs must be aware of complex IRS rules regarding IRA inheritance to avoid excessive taxes and penalties [3] - The "10-year rule" is crucial for non-eligible designated beneficiaries, requiring them to empty the IRA by the end of the 10th year after the account owner's death [4] - If the deceased had begun required minimum distributions (RMDs), beneficiaries must also adhere to RMDs to avoid penalties of up to 25% of the missed RMD value [5]