By Sarah Brenner, JD
Director of Retirement Education


We had a client who died with no beneficiaries on his $500k 401(k). He wasn’t married and only 45 years old. His parents are disclaiming rights to the inheritance, so it’s going to his siblings. Is there any way these two siblings can stretch the retirement account into an inherited IRA? If so, what does that look like?




Hi Patrick,

The siblings may still be able to use the stretch even after the SECURE Act eliminated it for most beneficiaries. Their first step should be directly rolling over the funds to inherited IRAs. It is very important that the funds move directly from the 401(k) to the inherited IRAs. This is because nonspouse beneficiaries cannot roll over distributions that are paid to them.

While the SECURE Act does eliminate the stretch for most beneficiaries, it does carve out an exception for those beneficiaries who are not more than ten years younger than the deceased account holder. If these siblings meet this definition – even if they are older than their deceased brother – then required minimum distributions can be stretched over their own life expectancy.

Good luck and I hope this helps!


Hi Ed,

I have heard that if you make a deductible contribution to a traditional IRA it can reduce the value of your qualified charitable distribution. Is the same thing true if you make a SEP contribution?


The SECURE Act removed the age limit for traditional IRA contributions, but unfortunately it also gave us a complicated rule limiting qualified charitable distributions (QCDs) when an IRA owner makes deductible traditional IRA contributions after age 70 ½. This tricky rule is limited to deductible traditional IRA contribution and does not apply to SEP contributions. Your SEP contribution will not affect your QCD. (Be careful, a QCD cannot be done from an active SEP.)