According to IRS rules, what can a non-spouse do with an inherited IRA?

A non-spouse beneficiary of an inherited IRA has several options regarding how they can manage and withdraw the funds. According to IRS rules, a non-spouse beneficiary can take a lump-sum distribution, allowing them to receive the entire balance of the IRA in one payment. Alternatively, they may choose to withdraw the funds over their lifetime, which is often referred to as a "stretch" IRA strategy, allowing for continued tax-deferred growth.

Additionally, the IRS provides a rule that allows non-spouse beneficiaries to have the inherited funds distributed by the end of the fifth year after the account holder's death, which is known as the "5-year rule." This gives flexibility in terms of timing and can help in tax planning for the individual.

Thus, a non-spouse beneficiary has multiple options available to them, encompassing all listed methods of distribution in the question. This understanding not only informs beneficiaries of their choices but also helps them make informed decisions based on their financial circumstances and tax implications.