Rules for an Inherited IRA

There are a few IRA rules that you should be familiar with if you are the beneficiary of an IRA account. The inherited IRA is an account that is setup after the primary owner of an IRA passes away. Here are the basics of the inherited IRA and the rules that apply to it.

Inherited IRA

When the funds of an IRA are left to a beneficiary a special IRA account must be opened. This is referred to as the inherited IRA, or the beneficiary IRA. If you are the beneficiary and a spouse, you can choose to roll the funds from their account into your own IRA. However, if you are a non-spouse, you must transfer the funds to an inherited IRA if you want to keep the tax advantage that comes with the retirement account.

Contributions

There are also rules governing contributions to the inherited IRA. With a regular IRA, you can make tax-deductible contributions to the account. However, with an inherited IRA, you are not allowed this privilege. You can only make withdrawals once the time comes. 

Withdrawals

Withdrawals from the inherited IRA depend on several different factors. They depend on how old the account holder was when they died, what type of IRA the account was, and what type of inherited IRA account you open. Consult with a financial professional when deciding which type of account to open. 

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