Inherited IRA rules vary, depending on a variety of factors, such as your relationship to the deceased IRA owner. For example, one set of rules applies if you are the surviving spouse and another set of rules applies to children of the decedent and other non-spouse beneficiaries. See heirs and beneficiaries. The age of the person from whom you inherited the IRA will also determine the rules for when withdrawals must be made from the account and in what amount.For specific instructions on the rules that will apply to your inherited IRA depending on whether the original owner had attained the age of 70 and a half, and whether you are a spousal or non-spousal beneficiary, refer to our
inherited IRAs page.If you inherit an individual retirement account and fail to make the required minimum withdrawals, known as required minimum distributions or RMDs, you will be subject to financial penalties.Because IRAs may contain invested assets such as stocks, bonds, ETFs, mutual funds, commodities, and real estate, it is important to consult a professional financial advisor and a tax professional promptly upon inheriting an IRA. Failure to properly manage these types of investments can lead to significant losses because the value of such assets can change daily. For tips on how to find a qualified advisor, see financial planning.
Inherited IRA Rules
Whether you recently inherited an IRA or are advising someone else about how to handle inherited assets, there are many free resources available online to guide you through the rules applicable to inherited IRAs. Failure to comply with applicable rules and deadlines regarding inherited IRAs can result in significant financial losses. Therefore, as soon as you receive any news that you may be inheriting a retirement account, it is a good idea to get a quick overview of inherited IRA rules, even though you will probably need to review them again after you have more detailed information about your inheritance. To learn more about how to go through the process of inheriting an IRA, see
IRAs and your estate plan.
Free Guides on Inherited IRAs
One of the best free resources available on inherited IRAs is IRS Publication 590. This publication provides detailed information for U.S. taxpayers about rules that apply to inherited IRAs. For example, it explains when you must make withdrawals from an inherited retirement account, including information on required minimum distributions or RMDs. To view this free publication, go to the IRS website and search for Internal Revenue Service Publication 590 Individual Retirement Arrangements.Financial services firms such as brokerage firms, mutual fund companies, and insurance companies also provide free information about how to manage inherited IRAs. Contact the firm that holds your retirement account for more information.This article was updated February 28, 2015.
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