Previously, an inherited IRA would default to the five-year rule—allowing beneficiaries to wait five years before distributions—even if a beneficiary was designated, as beneficiaries would have to elect to use the stretch IRA strategy, which extends the tax-deferred status of an inherited. Now, the stretch IRA is the default option, so most beneficiaries will never be subject to the five-year rule.

5. What If There’s No Designated Beneficiary?

If no beneficiary is named, or if an estate or other non-human entity is named on an IRA’s beneficiary form, then the rules for distributions are guided by the life expectancy of the deceased IRA owner.

If the deceased IRA owner dies after his or her required beginning date, then the longest possible distribution period for that IRA in 2019 is 15.3 years.

For example, if an IRA owner turned 70 and one-half in 2018, dies in June 2019 and has no designated beneficiary, then the IRA can be paid out over his or her remaining single life expectancy of 16.3 years as calculated by the IRS. The first RMD must be taken by Dec. 31, 2020, and the distribution should be calculated using the 15.3 years remaining on his or her life expectancy.

6. Creditor/Bankruptcy Protection Of IRAs

Unlike ERISA-covered retirement accounts like 401(k)s, IRA creditor and bankruptcy protection is typically determined at the state level. However, in 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act added IRAs and Roth IRAs, and any account exempted from federal income tax, to a list of assets exempt from any bankruptcy estate.

There is a limit of over $1.2 million on the amount of contributed IRA assets exempted from bankruptcy estates, and all rollovers from company defined contribution plans are also exempted and not counted towards the limit.

“It’s unlikely that anybody would have that much money in their IRA if you’re just looking at contributions and earnings,” said Andrew Ives, IRA analyst at Slott and Company.

Court rulings have supported bankruptcy protections for IRA rollovers in transit as well.