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

The decedent's retirement benefit must be rolled to an "inherited IRA" or "beneficiary IRA." Combining the proceeds with the beneficiary's personal retirement account will disqualify the benefits and make them fully taxable.

A 'FINAL' RETURN: Income Tax Planning for a Client's Passing

Having someone that they know and they know their parents trusted will make opening inherited IRA accounts and other types of accounts much easier.

Money Management: When to speak to your adult children about your finances the time is now

It can be made from a Roth IRA (although Roth distributions generally are already tax-free and are not subject to RMDs), an inherited IRA, a rollover IRA, or a qualified employer plan that permits employees to make voluntary contributions to separate accounts or annuities (a "deemed IRA" under Sec.

New life for IRA qualified charitable distributions

The Supreme Court held in June 2014 that an inherited IRA is not deemed as "retirement funds" under Bankruptcy Code section 522(b)(3)(C) and is not exempt from creditors [Brandon C.

Getting Married: A Tax Perspective Under the Tax Cuts and Jobs Act

If you don't want the money, you can always disclaim (refuse to accept) the inherited IRA or plan funds.

Retirement Q&A: What are my options if I inherit an IRA or benefit from an employer-sponsored plan?

If you name your spouse as the beneficiary of your IRA he or she can convert it from an inherited IRA by "rolling it over" into his or her own IRA The "roll-over" IRA should offer the same bankruptcy protection as your spouse's own IRA This, however, does not apply to the children.

Naming your revocable trust as beneficiary

Non-spouse beneficiaries of IRA accounts will have to pay taxes on money received from an inherited IRA at their own tax rate.

Leaving a Legacy

This plan avoids the inherited IRA's being taxed to the heirs at a higher tax rate.

Tax planning opportunities for tax attributes and the decedent's final tax return

Yet it's the state income tax issues that are sometimes even more challenging, especially if the IRA owner moves to a new state to retire or if the owner dies and the beneficiary has an inherited IRA. Let's take a look at a few situations to better understand some of the challenges confronted by an IRA owner or beneficiary.

Inherited IRAs and state income tax: the state income tax rules associated with IRA distributions, particularly to a beneficiary, can pose a challenge