An Inherited IRA (Individual Retirement Account) is a type of retirement account that you receive when you are the beneficiary of someone else’s IRA after they pass away.
1. Who can inherit an IRA?
Spouses: Have more flexibility, including treating the IRA as their own.
Non-spouses (children, friends, etc.): Must follow different withdrawal rules.
2. Required Minimum Distributions (RMDs):
The rules changed with the SECURE Act (2019) and SECURE Act 2.0 (2022). If the original owner died after 2019, most non-spouse beneficiaries must:
Withdraw the entire account within 10 years (known as the 10-year rule).
Some “eligible designated beneficiaries” (like minor children, disabled individuals, or those less than 10 years younger than the original owner) may take distributions over their lifetime instead.
3. Taxes
Traditional Inherited IRA: Distributions are usually taxable as ordinary income.
Roth Inherited IRA: Distributions are tax-free if the account was open at least 5 years.
SIMPLE IRAs are pre-tax accounts, so distributions are taxable as ordinary income—just like traditional IRAs.
4. You can’t contribute to an Inherited IRA.
It’s strictly a vehicle for receiving and distributing inherited retirement assets—not for ongoing saving.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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