Inherited IRA

Inherited IRA

An IRA in which distributions continue after the primary beneficiary's death. For an IRA to be inherited, the primary beneficiary must have already been receiving the required minimum distribution; the distributions either continue or are re-calculated based upon the secondary beneficiary's life expectancy. If the secondary beneficiary is the widow(er) of the primary beneficiary, she/he may roll over the inherited IRA into her/his own IRA without penalty.

Inherited IRA.

An inherited IRA is an IRA that passes to a beneficiary at the death of the IRA owner. If you name your spouse as the beneficiary of your IRA, your spouse inherits the IRA at your death. At that point, it is your spouse's property.

But if you name anyone other than your spouse, that beneficiary inherits the rights to income from your IRA, which continues to be registered in your name, but not the IRA itself.

References in periodicals archive ?
For IRAs with the surviving spouse as beneficiary, the executor/trustee should arrange a spousal rollover or the creation of an inherited IRA account.
Prior to the Court's ruling, in many states, the inherited IRA would have been protected from creditors, allowing the son to keep the assets in the family, likely as his father wished.
A "conduit trust" protects the balance of the inherited IRA from creditors of the trust beneficiary.
The Supreme Court held that funds held in an inherited IRA are not retirement funds that are exempt from a bankruptcy estate.
The advantage of creating an inherited IRA is that, if done properly, the Code allows the required minimum distributions from the IRA to be spread out over the life expectancy of the beneficiary, as opposed to that of a presumably older IRA owner, and no premature distribution penalties are assessed against the beneficiary, regardless of his or her age.
Properly "stretching" distributions from an inherited IRA can provide beneficiaries with significant income, so important differences between "stretching" traditional IRAs and Roth IRAs, to both spousal and non-spousal beneficiaries, is also presented.
As an attractive companion to the Roth conversion opportunity, the Pension Protection Act of 2006 created a "stretch" provision that allows a non-spouse beneficiary who inherits assets in a qualified plan to transfer the balance in that plan directly to an inherited IRA, and then to elect to spread distributions from that IRA over a lifetime.
There was some confusion about whether a plan had to offer a non-spouse direct rollover to an inherited IRA.
It is available at no cost to a range of Fidelity customers, including those over age 59u with a Fidelity Traditional, Rollover or Roth IRA, as well as Inherited IRA owners of all ages.
The Nessa court affirmed the decision of the bankruptcy court that assets in a debtor's inherited IRA were "retirement funds" and that the IRA was exempt under Sec.
An inherited IRA cannot be converted to a Roth IRA, while an inherited employer plan can be.
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