What You Need to Know About Non-Spouse Inheritance of an IRA

August 15, 2016


Because of the popularity of Individual Retirement Accounts (IRA) they will likely be a part of an estate plan.  If the IRA is left to a spouse, it is fairly simple, but other beneficiaries may face taxes they did not plan on if they do not get good advice.  Because most IRAs defer taxes, those may need to be paid when the funds are distributed after death.

Non-spouse beneficiaries of an IRA need to be aware of special rules that affect the distribution and taxability of IRAs.  For example, if you inherit an IRA, you cannot simply transfer it into your own existing IRA.  However, you do not have to cash out the IRA and pay taxes, as there are ways to keep the funds intact and growing over a long period of time.

Please contact us if you have questions about the rules for inherited IRAs and how to structure your estate plan to accommodate non-spouse beneficiaries.

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