Inherited IRA Needs Attention to Detail

MB900399523[1]When you inherit money, once youreceive it you can usually decide where it goes from there, such as a simpledeposit in savings. When you inherit an IRA, it’s a whole different ball game. Andany mistakes will be punished by the IRS. When handling IRA money, make sureyou mind the details of the transfer.

The Slott Report considered this matter in a recent article titled“Moving Inherited IRA Money? Be Careful.” If you inherit non-IRA money, plainand simple, then you could stick it in any bank account or investment and bedone with it. Unfortunately, there are extra steps to consider when movinginherited IRAs.

For starters, you cannot move aninherited IRA into your own IRA if you are a non-spouse beneficiary. What ifthe financial institution where the account is held charges too much or anotherinstitution has better investment options? How do you move the inherited non-spousalIRA? The direct approach, naturally.

In a direct IRA transfer thefirst bank cuts the check to the second bank, for your “benefit” as beneficiarybut NOT in your “name.” If the check is made payable to you, then it’s alreadytoo late. The tax deferral advantage of the IRA will be lost and taxes due.Moreover, in the transfer the receiving IRA has to be of the same kind of IRA(i.e., from a traditional IRA to traditional IRA, or from Roth to Roth).

Since there are many detailsassociated with inherited IRAs, you should consult Idaho Estate Planning before you make a move. Otherwise, there can be some hefty taxes to payat ordinary income tax rates. For informatin on retirement and other critical subjects visit our website where you'll find a wealth of information including our blog and instructional videos from our You TubeChannel. Remember, good planning is no accident.


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