Inherited IRA Transfers

Obtaining Help from a Scottsdale Estate Planning Lawyer

There are many things that individuals can leave to their loved ones after they pass away. One of those is things is an IRA, or an Individual Retirement Account. Holders of these retirement plans can designate beneficiaries, i.e. individuals chosen to receive the IRA benefits after the account holder's death. When you inherit the benefits of an IRA in this way, you have multiple options. Surviving spouses have the option to rollover the IRAs into their own accounts. Since non-spouses cannot do this, they are left with the options of withdrawing all the funds, leaving the money in the original IRAs or creating inherited IRA accounts. Properly opening an inherited IRA account can produce income tax advantages.

Scottsdale Estate Planning Attorney Grant McKeehan, of Grant N. McKeehan, PLC, can inform you about how inherited IRA accounts work, as well as whether this is the best option for you. Figuring out what to do with an IRA after the account holder has passed away can be very confusing, so it is best to consult with a knowledgeable lawyer about the decision that will work best in your favor.

What is an inherited IRA?

A few examples of non-spouse IRA beneficiaries include children, siblings, close friends or other individuals designated by the original account holder. These individuals have the option of transferring the IRA funds to "inherited IRA" plans. With this option, the beneficiary cannot treat the IRA as his or her own as a surviving spouse would—for example, the beneficiary cannot change the account to be under his or her name, and the individual cannot make contributions to the account. The individual can, however, allow the funds to continue growing tax-deferred. Inherited IRAs must be set up using trustee-to-trustee transfers—or basically transferring the IRA from one account custodian directly to another without having to personally withdraw the funds and place it in a brand new account. Making these types of transfers are an alternative to withdrawing the full account balance and becoming immediately liable for income taxes on such amount.

Importance of Working with an Attorney

When you inherit the benefits of an IRA account, there are many factors that you will need to consider, such as your relationship to the deceased person, the account holder's age at the time of his or her death, your age and the future income taxes. Work with a skilled attorney to evaluate your options. Contact Grant N. McKeehan, PLC to receive the guidance you need!