If you’ve inherited an IRA you need to be aware of the rules the IRS has in place for these accounts.
In this video, Curt explains how inherited IRAs are treated differently than other inheritance, and how your relationship to the benefactor makes a big difference in how you handle the money you’ve received.
00:00 – Start
00:13 – SECURE Act Impact
01:08 – 1) Spousal Beneficiaries
01:38 – 2) Non-Spousal Beneficiaries
02:29 – 3) Exceptions to the 10-Year Rule
02:48 – 4) Roth vs Traditional
03:16 – 5) Not Like Other Inheritance
03:57 – 6) Final Thoughts
04:40 – 7) Wrap-Up
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Disclaimer: This video is for information and entertainment only. None of the contents should be considered legal, accounting, or other professional advice. You should reach out to a qualified professional before making your own financial decisions.
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When a loved one passes away and leaves an Individual retirement account (IRA) behind, there are specific rules and regulations that govern how the inherited IRA can be managed. Inherited IRAs can be a valuable asset, but it’s important to understand the rules and options available to avoid potential tax penalties and complications.
The rules for inherited IRAs depend on the relationship between the deceased and the beneficiary. There are different rules for spouses and non-spouse beneficiaries, and the options for managing the inherited IRA can vary accordingly.
For spouses who inherit an IRA, there are several options available. They can choose to roll the inherited IRA into their own existing IRA, which allows them to continue making contributions and managing the account as their own. Alternatively, they can choose to treat the inherited IRA as their own, which gives them more flexibility in managing the assets. Finally, they can choose to take distributions from the inherited IRA as a beneficiary, either through a lump sum distribution or through periodic distributions. Each option has different tax implications and considerations, so it’s important to carefully consider the best approach based on individual circumstances.
For non-spouse beneficiaries, the rules for inherited IRAs are different. Non-spouse beneficiaries are typically required to take Required Minimum Distributions (RMDs) from the inherited IRA, based on their life expectancy. There are also options to take distributions as a lump sum or over a five-year period, but these options may have significant tax implications. Non-spouse beneficiaries should carefully consider the best approach for managing the inherited IRA based on their individual financial situation and tax considerations.
It’s important to note that the rules for inherited IRAs can change, and it’s advisable to consult with a financial advisor or tax professional to ensure compliance with current regulations. There are also specific deadlines for taking distributions from an inherited IRA, and failing to meet these deadlines can result in significant tax penalties.
Inherited IRAs can be a valuable asset, but they require careful consideration and management. Understanding the rules and options available for managing an inherited IRA is essential to make informed decisions and avoid potential tax complications. By carefully considering the best approach for managing an inherited IRA, beneficiaries can ensure that they maximize the value of the asset while remaining in compliance with regulations.
4:04 Beneficiaries – One of my kids lives in Australia and I was wanting to know if you have any videos concerning international beneficiaries and the taxes etc. that may be involved?? For lack of knowledge, all of my contingent listings go to my child that still resides in the states; however, we do not want our first to feel slighted by this.
3:15 I'm assuming that you cannot roll an inherited ROTH in with your own…. Would this leave the ability to draw it tax-free and live on it (for however many years it would last) while moving a corresponding amount of earned income (up to legal limits) into your own ROTH (& Spousal ROTH) and things like 403b / 457b during this time?
1:34 A couple questions here…. 1) If you rename then can you rollover at anytime thereafter? 2) If I'm younger than my wife (about 5 years) and end up inheriting an Traditional IRA from here, is this when I would need to submit something to the government?
Sounds like the Secure Act shafted the people in favors of harvesting taxes sooner.
4:58 So As I was listening to your video, I was trying to figure out were you where at . At first I thought you were recording the video while sitting on a be at a motel, but then I realized those were monitors and not a headboard behind you. (I was watching in a 4" video pix in a pix view)
Thank you for the information.
I've had an inherited IRA from my Dad, for 5 years. Nobody told me about the 10 year rule. I'm planning on retiring next year at 59, this will change my strategy by pulling money out of the inherited IRA first.
Subscribed to you channel for more helpful information.
Is this similar for a 401k ?