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 ?
* Qualified charitable distributions can come from most types of IRAs, including rollover IRAs and inherited IRAs, other than "ongoing" simplified employee pension (SEP) IRAs or savings incentive match for employees (SIMPLE) IRAs.
If your choices are limited by a plan, you may have the ability to transfer the plan funds to an IRA established in the deceased IRA owner's or plan participant's name--the rules that apply to inherited IRAs would apply to the transferred funds.
Supreme Court held that inherited IRAs are not "retirement funds" that would otherwise be exempt from most creditors' claims in bankruptcy.
* Curtail "stretching" of inherited IRAs and 401(k)s;
Inherited IRAs by a non-spouse beneficiary after the death of an IRA owner
To manage inherited IRAs. The rules around IRAs that pass by inheritance from one generation to another can be convoluted, particularly with regard to taxation, Lovell says.
A recent Supreme Court case clarified that inherited IRAs are not afforded any protection under federal bankruptcy laws.
There are many nuances with Inherited IRAs, including if the beneficiary is a spouse or non-spouse, and how long the money has been in the account.
Next, it discusses the legal history of both non-inherited and inherited IRAs leading up to the Clark decision.
It suggests how taxpayers and their advisers may nonetheless achieve a degree of asset protection from creditors for inherited IRAs. Specifically, with either of two types of "see-through" trusts, an IRA owner may designate an individual as the trust's beneficiary to receive IRA distributions.
The current decision draws a distinction between self-funded and inherited IRAs, ruling that the latter are not "retirement funds" as defined by Section 522(b)(3)(C) of the U.S.C., so they cannot be exempted during a bankruptcy.
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?
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