What is a distribution option available to a nephew inheriting an IRA from an unmarried individual who passed away?

The correct approach for a nephew inheriting an IRA from an unmarried individual who has passed away is to consider the available distribution options provided by the IRS. In this scenario, the rules surrounding the distribution of inherited IRAs play a significant role in determining the options available.

For a non-spouse beneficiary, such as a nephew, one particularly relevant option is to receive the inherited IRA as a lump sum. This allows the beneficiary to take immediate access to the funds, which can then be used at their discretion.

The option to roll over the inheritance into an existing IRA is not permissible for non-spouse beneficiaries. This means that the nephew cannot simply transfer the IRA funds into his personal IRA account without making a distribution.

Receiving the inheritance as a lifetime annuity payment is also not an option available to non-spouse beneficiaries under the current IRS regulations regarding inherited IRAs.

Lastly, while a non-spouse beneficiary can opt for a five-year rule for distribution (where the entire balance of the IRA must be distributed within five years of the account owner's death), this is only one of several choices. The five-year option, however, would not allow for some immediate access to the funds in the same way that a lump-sum payment does.

Therefore