With so many people having IRAs as part of their retirement, what happens when they pass away? What are some of the pitfalls? There was a recent court case involving an inherited IRA. What happened? What lessons can we learn? Watch Szarka Financial’s Senior Financial Advisor Alex Menassa, MT, CPA discuss these issues with Fox 8 News Anchor Roosevelt Leftwich.

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Inherited Individual Retirement Accounts (IRAs) can be a great financial tool, but they can also be a tax disaster if not handled correctly. With the right guidance, however, you can make sure your inherited IRA is a financial success.

When you inherit an IRA, there are a few important things to keep in mind. First, you must understand the rules around inherited IRAs. Depending on the type of IRA you inherit, the rules may be different. For example, if you inherit a Traditional IRA, you must begin taking required minimum distributions (RMDs) within a certain time frame. If you inherit a Roth IRA, you may not have to take RMDs.

Second, you must understand the tax implications of inheriting an IRA. Depending on the type of IRA you inherit, you may be subject to different tax rates. For example, if you inherit a Traditional IRA, you will be subject to ordinary income taxes on any distributions you take from the account. If you inherit a Roth IRA, you will not be subject to any taxes on distributions.

Finally, you must understand how to properly manage an inherited IRA. When you inherit an IRA, you must make sure you are taking the right amount of distributions each year to avoid penalties. You should also make sure you are investing the funds in the right way to maximize your returns.

Inheriting an IRA can be a great financial tool, but it can also be a tax disaster if not handled correctly. By understanding the rules, tax implications, and proper management of an inherited IRA, you can make sure your inherited IRA is a financial success.