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 ?
An inherited IRA cannot be converted to a Roth IRA, while an inherited employer plan can be.
They now have the right to spread the inherited IRA distributions over their individual life expectancies, according to Appendix C, Table 1 of IRS Publication 590.
8 The Pension Protection Act of 2006 created a "stretch" provision that allows a non-spouse beneficiary who inherits assets in a non-qualified plan to transfer the balance in that plan directly to an inherited IRA.
So if you inherit 401(k) funds from someone other than your spouse, you'll need to set up a separate inherited IRA.
However, care must be taken to ensure that the new inherited IRA is set up in the name of the decedent IRA owner, with the beneficiary being identified in the account title (e.
Second, surviving spouse beneficiaries should roll over an inherited IRA or name their own beneficiaries as soon as possible after the death of the IRA owner.
After death, the beneficiaries will succeed to the account, and the IRA will become known as an Inherited IRA.
he or she must be required to take RMDs) and the account must be a traditional or inherited IRA (not an employer-sponsored retirement plan).
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.
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.
The beneficiaries of the inherited IRA requested a ruling that the division of the IRA would not constitute a taxable distribution or rollover under IRC Section 408(d).
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