What are the rules regarding inherited IRAs? When my mom died this year, I inherited her traditional IRA and would like to know what I need to do to execute it properly.

I am very sorry about the loss of your mother. Inheriting a traditional IRA from a parent has a unique set of rules you need to know which will help you make the most of the money you inherit and avoid a tax-time surprise. Here are some basics.

Set Up an Inherited Account

Many people think they can roll an inherited IRA into their own IRA. But if you inherit an IRA from a parent, aunt, uncle, sibling or friend you cannot roll the account into your own IRA or treat the IRA as your own. Instead, you will have to transfer your portion of the assets into a new IRA set up, formally named as an inherited IRA. For example, it could be titled [name of deceased owner] for the benefit of [your name].

If your mom's IRA has multiple beneficiaries, it can be split into separate accounts for each beneficiary. Splitting an account allows each beneficiary to treat their own inherited portion as if they were the sole beneficiary.

You can set up an inherited IRA with many bank and brokerage firms. However, the easiest option may be to open your inherited IRA with the firm that held your mom's account.

10-Year Withdrawal Rule

Due to the SECURE Act, which was signed into law in December 2019, many non-spouse (but not all) IRA beneficiaries must deplete an inherited IRA within 10 years of the account owner's death. This applies to inherited IRAs if the owner passed away after Dec. 31, 2019.

There is no limit on when or how often you withdraw money from the account, as long as the account is empty by the end of the 10 years. This means you can choose to withdraw all of the money at once, you can leave it sitting there for a decade and then take it all out, or you can take distributions over time. Be aware that just as with a non-inherited traditional IRA, each withdrawal will be counted as income and subject to taxes in the year you make the withdrawal.

Exceptions to the Rule

There are several exceptions to the IRA 10-year rule, including for a surviving spouse, minor child, disabled or chronically ill beneficiary or a beneficiary who is no more than 10 years younger than the original IRA owner. These beneficiaries may have more time to draw down the account and pay the resulting tax bill.

For example, when you inherit an IRA from a spouse, you can rollover the IRA balance into your own account and delay distributions until after you turn age 72.

Minor children do not become subject to the 10-year rule until they reach the "age of majority," which is age 18 in most states. Disabled and chronically ill beneficiaries, and individuals no more than 10 years younger than the original account owner have the option to stretch required withdrawals over their lifetime.

Minimize Your Taxes

As tempting as it might be to cash out an inherited IRA in a lump-sum withdrawal, tread carefully. This option could leave you owing a hefty sum when it is time to file your taxes. Withdrawals from a traditional IRA are generally taxable as income, at your income tax rate.

For some people, it can be a smart tax move to gradually draw down the account over the 10-year period to avoid a large tax bill in a single year and potentially being bumped into a high tax bracket. If you are approaching retirement, you may want to wait to start withdrawing from the account until you are retired and your income drops, potentially putting you into a lower tax bracket.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.