What if you should Inherit an IRA

What if you should Inherit an IRA

by Kristin P. Sinclair – A Accu Tax – September 1, 2018

Medicare Professional Insurance Kristin SinclairIf you or your spouse should die, then the survivor generally has several options for the Inherited IRA:

A.) Spousal survivors can designate themselves as the IRA owner, and then the survivors may elect to treat the Inherited IRA as their own Traditional IRA.

B.) Treat the Inherited IRA as their own by rolling it over into: their Qualified Employer Plan (such as a 401k plan); their Qualified Employee Annuity Plan (403a plan); their Tax-Sheltered Annuity Plan (403b plan); or their state or local government Deferred Compensation 457 plan.

C.) The surviving spouse may also elect to treat themselves as the IRA Beneficiary, rather than treating the Traditional IRA as their own IRA.

Please note that surviving spouses designated as the sole beneficiary, and who have an unlimited right to withdraw funds, will also be considered to have treated an Inherited IRA as their own Traditional IRA if: they do not take the Traditional IRA required minimum distribution (RMD) for a year; or make contributions to the Inherited IRA. Such contributions also include Traditional IRA Rollover Contributions into the Inherited IRA.

Learn More