What if You Inherit an IRA? 2 FAQ’s

Two women 65+ look towards their futures

Who wants to ask about inheriting an IRA? No one, but you have to do it anyway.
Here we answer two questions which may come to mind.

Question 1. If you inherit an IRA, can you transfer this to your own IRA? Answer 1. It depends. If you are the spouse of the IRA owner, you may move the deceased IRA to an IRA in your own name. If you are not the spouse, you have to transfer the IRA to an Inherited IRA with the original owner’s name on the IRA along with your own. You have to take a required minimum distribution from the IRA each year based on your life expectancy. You can take the money out over five years, or you can take it all out at once. You pay taxes on the money no matter what time span is chosen for distributing the money.

Question 2. Do I pay taxes on the distributions if I inherit a Roth IRA? Answer 2. Generally, you do not pay taxes on distributions from a Roth IRA. If you hold the Roth IRA for 5 years or more, you pay no taxes on what you withdraw. If you haven’t held the Roth IRA for five years, none of the original amount will be taxed only the earnings on the account will be taxed.

Category: Inheritance · Tags: , , ,

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