Lawyer EXPLAINS: What to do if you have an Inherited IRA
Losing a loved one is always a difficult experience, and dealing with the complexities of their estate can add additional stress. If you’ve inherited a retirement account, you may be unsure about what steps to take next. In this guide, we’ll walk you through the options available to you, whether you’re a spouse or a non-spouse beneficiary.
When it comes to inheriting a retirement account, there are two primary categories: spouse and non-spousal beneficiaries. The IRS distinguishes between these two groups, each with its own set of rules and considerations.
Spouses as Beneficiaries
If you’re the spouse inheriting a retirement account, you have a unique set of options available to you. One common strategy is the spousal rollover, where you can roll over the inherited account into your own name. This allows you to continue the tax deferral benefits of a traditional IRA or the tax-free growth of a Roth IRA.
Non-Spouse Beneficiaries
For non-spouse beneficiaries, the rules are a bit different. Typically, non-spouse beneficiaries must take distributions from the inherited account over a ten-year period, known as the ten-year rule. However, the exact timing and amounts of these distributions can vary.
Choosing Your Investments
One advantage of inheriting a retirement account is the ability to choose your investments. With a self-directed IRA at Directed IRA, you can invest in a wide range of assets beyond traditional stocks and bonds, including real estate, private companies, and cryptocurrencies. This can be a great opportunity to tailor your investments to your specific financial goals.
Inheriting a retirement account can be a significant financial opportunity, but it’s important to understand the rules and options available to you. Whether you’re a spouse or a non-spouse beneficiary, there are strategies you can use to make the most of your inheritance.
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