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).