Inherited IRA Rules

If you inherit an IRA, you may need to take distributions from it immediately.  Here are the rules –

http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/inherited_ira/withdrawal_rules

Basically, if it’s your spouse that died, you can stick the money in your own IRA.

If not, then you can choose:

(1) Take a lump sum payment

(2)  Take the payment within 5 years

(3) Take the payments over the course of your lifetime (they assume max age is like ~83ish)

Since the money you don’t distribute grows tax free… it would seem that #3 has the highest long term value, as long as you’re already maxing your own Roth/401k/Sep IRA contributions.  I need to do a little more reading about this though.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s