In this video, learn the basics about Inherited IRA’s and what to do with an Inherited IRA if you have one!

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LEARN MORE ABOUT: IRA Accounts

TRANSFER IRA TO GOLD: Gold IRA Account

TRANSFER IRA TO SILVER: Silver IRA Account

REVEALED: Best Gold Backed IRA

Inheriting a traditional or Roth Individual retirement account (IRA) from a loved one can seem overwhelming. It’s important to understand your options and obligations to make informed decisions about what to do with the inherited account.

Firstly, it’s crucial to know if you are the spouse or non-spouse beneficiary of the IRA. Spouses have more flexibility in what they can do with the inherited account, whereas non-spouse beneficiaries have more restrictions.

Spouses have the option to roll over the inherited IRA into their own IRA or keep it as an inherited IRA. Rollovers allow the spouse to treat the inherited account as their own, and they can make contributions, take distributions, or convert it to a Roth IRA. By keeping the inherited IRA, the spouse can take distributions based on their own life expectancy, which can allow for more flexibility in managing taxes and planning for retirement.

Non-spouse beneficiaries, on the other hand, are generally required to take distributions from the inherited IRA based on their age and IRS regulations. These distributions are known as Required Minimum Distributions (RMDs) and must begin by December 31 of the year following the original account holder’s death. Non-spouse beneficiaries cannot roll over the inherited IRA into their own IRA.

It’s also important to note that traditional inherited IRAs are subject to income taxes, and Roth inherited IRAs are not. Non-spouse beneficiaries of traditional inherited IRAs must pay income taxes on the amount withdrawn, while beneficiaries of Roth inherited IRAs do not have to pay taxes on distributions.

There are some exceptions to the rules above, and it’s important to consult with a financial advisor or tax professional to determine the best course of action for your situation.

In conclusion, inheriting an IRA comes with many options and obligations, and it’s important to understand your choices. If you are a spouse beneficiary, you have more flexibility, and non-spouse beneficiaries have more restrictions, such as RMDs. It’s important to consult with a financial advisor or tax professional to make informed decisions about what to do with the inherited account.