Self directed inherited IRA SECURE Act

[Billy Brown]

I have been reading about advantages of using self directed ira/ solo k. What I dont understand is that for an inherited Ira, how does this work with the changes in the Secure act? I must deplete my account by the end of 10 years. If I use this to buy a property, what happens at year 10? Eg if my current value is 100,000 and I have this in a self directed Ira, and I use those funds to purchase a property, how do I deplete those funds when it’s tied up in a property that isn’t liquid. Must I sell it ?  

[Brian Eastman]

Billy,

An inherited IRA can be self-directed. It will be treated like any other IRA for purposes of distributions, so you will have a 10 year window in which you need to distribute the entire account.

If you hold a large, illiquid asset like real estate in the plan at the end of that window, you would either need to sell the property and distribute cash or distribute the property in-kind by doing an appraisal and then changing title from the IRA to your name.

Taking a large value out of the IRA at one time can have significant tax impact. Sometimes it is better to distribute the IRA in smaller portions over time - which is difficult to do when the IRA holds property. You should discuss this matter with licensed counsel familiar with your situation, income, tax thresholds, etc.

Investing in more liquid assets such as notes may be a better strategy with an inherited IRA.