What are your basic options?
Once you inherit a self-directed plan, the first real decision is whether to keep the alternative assets or convert them to cash. Neither path is automatic. Keeping the assets generally means continuing them inside a self-directed structure in your own name. Liquidating means the assets are sold or distributed and the value moves forward as cash instead.
There's no single right answer here. It depends on whether the asset itself still makes sense for you to hold, whether you're equipped to manage something like a rental property, and how the distribution timeline you're working with (covered below) affects the decision.
What does liquidating actually look like?
If you decide not to keep the alternative assets, there are a few ways the value can end up in your hands. The asset can be sold and the proceeds distributed to you as cash, the same as any distribution. It can also be distributed to you in-kind, meaning you receive the asset itself rather than its cash value, which shifts the question of whether to sell it onto you personally rather than the plan. Or, if you want to preserve the tax-deferred or tax-free status of the funds rather than take a taxable distribution, the value can move via rollover or transfer into a conventional Inherited IRA, where it's held as cash or public securities going forward rather than as an alternative asset.
Which of these makes sense depends heavily on your personal tax situation and what you intend to do with the funds. This is a conversation worth having with a CPA or estate planning attorney before you act, not after.
How much time do you have to decide?
Less than beneficiaries used to have. Before the SECURE Act, many non-spouse beneficiaries could stretch distributions from an inherited IRA over their own life expectancy. SECURE 2.0 did away with that for most people. A non-spouse beneficiary now generally has to fully distribute the account within 10 years of the original account holder's death, whether or not any distributions are required along the way. A spouse still has considerably more flexibility, and a handful of other beneficiary types, minor children, disabled or chronically ill individuals, and those close in age to the original owner, qualify for different timelines.
There's also an early deadline worth knowing about regardless of which path you're leaning toward. September 30 of the year following the original account holder's death is the date that determines who counts as a beneficiary for distribution purposes. Decisions made before that date, such as a qualified disclaimer by one beneficiary, can still affect how the account is split and distributed. It's an early date to have on your radar, well before the broader 10-year window even starts to feel urgent.
For the fuller rules around beneficiary types and exceptions, see what happens to an IRA and what happens to a Solo 401(k) at the original owner's death.
What if you want to keep the assets self-directed?
If you decide the alternative assets are worth continuing to hold, they need to end up in the right kind of plan in your own name, and how smoothly that goes often traces back to the succession planning the original account holder put in place. For an inherited IRA, that generally means establishing a self-directed Inherited IRA structure rather than a conventional one, so the LLC or Trust holding the asset can continue under your ownership rather than being unwound. For a Solo 401(k), the plan generally can't simply continue as-is; it depends on whether you independently qualify to sponsor a plan of your own, and the assets typically need to move into a compatible plan in your name.
Either way, this isn't something that happens automatically alongside the paperwork. It takes deliberate setup, and it's worth starting that conversation with us and with your tax advisor early rather than assuming continuity is a given.
What if there's more than one beneficiary?
Multiple beneficiaries inheriting the same self-directed plan adds real friction if the assets are going to stay in alternative form, and it's a good example of why how beneficiaries are named on the account matters well before this situation ever arises. An IRA LLC or IRA Trust with more than one owner starts to look like a partnership, and partnership-style checkbook entities carry tax reporting requirements and restrictions that are considerably more complex than a single-owner structure. It's technically possible, but it's the kind of situation that calls for an attorney experienced in this area before any structure gets set up, not after.
In many multi-beneficiary situations, converting the asset to cash and dividing it among beneficiaries turns out to be the more practical path, simply because it avoids the complexity of co-ownership altogether. That's a decision to make with your advisors, weighed against what the family actually wants to do with the asset.