Inherited IRA rules changed — how to avoid a tax bomb and penalties under new IRS rules

Inherited IRA tax rules: Recent IRS changes mandate beneficiaries to empty inherited IRAs within 10 years, with exceptions for certain individuals. Failing to take Required Minimum Distributions (RMDs) can result in significant penalties. Traditional IRA withdrawals are taxed as ordinary income, while Roth IRA withdrawals are tax-free if the account is at least five years old.