Inherited IRA

Also known as a beneficiary IRA, an Inherited IRA is created for beneficiaries when an individual inherits an IRA or retirement plan.

At a Glance

What should you know about a self-directed Inherited IRA?

To finalize a new Inherited IRA, you may need to provide additional documentation. Before starting the Inherited Election Form, prepare to attach the applicable documents listed below.

If you hold an IRA with another custodian, please provide us with an account statement from that custodian. This statement should include your name as the beneficiary, the complete account number, account type, and the full naming convention reflecting the Decedent’s name.
If you are inheriting this account from a NDTCO client, a certified copy of the death certificate is necessary.

Tax Benefits

The tax benefits of the original plan (Traditional IRA, Roth IRA, etc.) are retained by the Inherited IRA.
Investment earnings, including those yielded following the inheritance, are tax deferred.
If you inherit an IRA, it may be a good idea to consult a CPA, tax professional, or estate planning professional to ensure you understand your options and any tax ramifications.

Other Considerations

Spousal beneficiaries have several options depending on whether or not you are the sole beneficiary. You may be able to treat the decedent’s account as your own, rollover the account into your existing Traditional IRA or similar account, or move the account into a new Inherited IRA.
Non-spousal beneficiaries can open an Inherited IRA and make a trustee-to-trustee transfer from the decedent’s account into the new Inherited IRA. Once the account is inherited, you can open and fund an Inherited IRA and distribute the account over time or take a lump-sum distribution. However, you cannot elect to treat the account as your own and cannot make any contributions or rollover any amounts into or out of the account.
With an Inherited IRA, you can invest in real estate, private loans, private equity, precious metals, or any other alternative asset of your choosing.

Getting Started

How do you fund your Inherited IRA account?

Contributions

Spousal beneficiaries may only make contributions when you elect to treat the inherited account as your own IRA. You may not make contributions to a beneficiary IRA.

Transfers

Beneficiaries may transfer the inherited IRA according to the rules of the account type. Multiple IRAs from the same decedent may by transferred into a single account.

Rollovers

Sole spousal beneficiaries may complete a rollover of the inherited account according to the rules of the account type. An inherited qualified retirement plan, such as a 401(k) or 457 plan, may be rolled over into a beneficiary IRA by direct rollover only. Once an Inherited IRA is established, it does not allow for rollovers.

Distribution Rules

What should you know about Inherited IRA distributions?

Minimum Distribution Facts

Spousal beneficiaries must adhere to any required minimum distribution obligations inherent to the particular account type and the age of the decedent.

If you are the sole spousal beneficiary and you elect to take the account as your own, you are subject to required minimum distributions based on your age and the account type.
Non-spousal beneficiaries may need to take a minimum distribution each year based on the beneficiary’s life expectancy, or you may choose to fully distribute the inherited account by December 31st of the tenth year after the year of the decedent’s death.

Early Distribution Facts

Spousal beneficiaries, by treating the inherited account as your own, are subject to early distribution rules based on the account type. If the inherited account is moved to an Inherited IRA instead of the spouse's own account, there are no early distribution penalties.
A non-spousal beneficiary’s Inherited IRA is not subject to early distribution penalties.

Other Investments

ROI is everywhere if you know where to look

No financial advisor knows you better than yourself. With an Inherited IRA, you have the freedom to invest your tax-advantaged retirement funds in the assets you’re most passionate about.

From real estate to start-ups to small businesses, if you can find it, we will help you fund it.