Is a beneficiary IRA the same as a traditional IRA?

While a beneficiary Individual Retirement Account (IRA) has the same fundamental tax advantages of a traditional IRA, there are very different rules regarding the handling of beneficiary accounts. In addition, beneficiary rules are different depending on whether a spouse or non-spouse inherits the IRA.

Can I manage my own inherited IRA?

For example, when you inherit an IRA from a spouse, you can transfer the IRA balance into your own account and delay distributions until after you turn age 72. Disabled beneficiaries and those within 10 years of age of the original account owner have the option to stretch required withdrawals over their lifetime.

What happens if you inherit and IRA?

Distributions from an inherited IRA can be invested in other accounts. Consider all your options when taking RMDs and other distributions from an inherited IRA. Generally, your distribution is included in your gross income and will be subject to ordinary state and federal income taxes.

Can you transfer an inherited IRA to a traditional IRA?

If you already have an IRA, you can roll over the inherited assets to another traditional IRA in your name or convert the assets to a Roth IRA. The simplest way to do that is through a direct, trustee-to-trustee transfer from one account to the other or between one IRA custodian and another.

Can a inherited IRA be rolled into a traditional IRA?

With an inherited IRA, you have the option of rolling the inherited account into another account – like a traditional IRA, 403(b) or 457(b) plan – if you are the spouse of the previous account holder.

Can a beneficiary of an inherited IRA be an owner?

Your second option is to roll the inherited account – tax-free – into an IRA you already possess. If you have an employer retirement plan, you can roll the inherited IRA into that account, as well. In both of these situations, you become the owner of the IRA. The third option is to treat the account as a beneficiary, not as the owner.

What to do if your spouse inherits a traditional IRA?

The IRS lists three options for spouses who inherit a traditional IRA. If that’s you, the first option is to designate yourself as the account owner. You’ll put the account under your name (also known as “retitling”). This way, the account is yours to contribute or withdraw from.

When does an inherited IRA have to be opened?

Open an “inherited IRA” account. As the name implies, inherited IRAs are created specifically for accounts that someone else leaves you. The account remains in the name of the deceased, and you are the beneficiary. Generally, the assets will have to be distributed within 10 years of the account owner’s death unless an exception applies.