Inherited IRA

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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 ?
Members of Ed Slott's Elite IRA Advisor Group(SM) studied advanced-level case studies in Roth IRA recharacterizations and rollovers, avoiding excess contribution penalties and navigating inherited IRAs.
It suggests how taxpayers and their advisers may nonetheless achieve a degree of asset protection from creditors for inherited IRAs.
The Court found that retirement funds are funds "set aside for the day an individual stops working" and that three legal characteristics of inherited IRAs indicate that inherited IRAs do not contain retirement funds.
With the government discussing the elimination of inherited IRAs, the elimination of stepped-up basis, and reductions in itemized deductions, wouldn't families benefit from a tax reduction strategy?
RMDs arc due from inherited IRAs beginning in the year after the original owner's death.
The court stated that while inherited IRAs are exempt from taxes until distributions are made to the beneficiary, beneficiaries of inherited IRAs are required to take distributions.
But, and this could affect millions of them, many boomers have inherited IRAs that require the RMD each year, even though the inherited IRA holder may be working and not need the withdrawal.
Inherited IRAs are treated with even more reserve, with only 8 of 18 firms providing detailed Beneficiary/Inherited IRA RMD information.
Curtail "stretching" of inherited IRAs and 401(k)s.
The line of cases that deny exemptions in inherited IRAs commonly conclude that inherited IRAs are (1) fundamentally different from a traditional or Roth IRA under the Code and (2) lack a retirement purpose.
This transfer is deemed to be an eligible rollover distribution, allowing the nonspouse beneficiary to defer tax on the rolled-over portion of the retirement plan, subject to the minimum required distribution (MRD) rules for inherited IRAs (see section 401(a)(9)).
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