How Rules Differ On Inherited IRAs For Spouse And Non-Spouse

pSo what happens when you inherit retirement plans? It all depends on the type of account. It also depends on whether the beneficiary is a spouse. Those variables will determine the rules that govern how the inheritance is taxed and what options are available. These rules can be confusing and it’s highly recommended that you seek out professional advice to make sure that your understanding is valid before making any decisions that would have significant financial impact./ppThe following summary, as structured by a href=https://www.schwab.com/public/schwab/investing/retirement_and_planning/u... target=_blankSchwab/a, highlights some of the significant differences in the rules between Spouse/Non-Spouse Traditional IRAs/Roth IRAs:/ph4strongTraditional IRA / Spouse Inherits/strong/h4pIf you inherit a Traditional, Rollover, SEP, or SIMPLE IRA from a spouse, you have several options, depending on whether your spouse was under or over age 70½. Most commonly, those who inherit an IRA from a spouse transfer the funds to their own IRA./polliIf your spouse was under 70½, your choices are:olliYou transfer the assets into your own existing or new IRA./liliYou transfer the assets into an Inherited IRA held in your name.olliLife Expectancy Method/lili5 Year Method/li/ol/liliAll assets in the IRA are distributed to you./li/ol/liliIf your spouse was over 70½, your choices are:olliYou transfer the assets into your own existing or new IRA./liliYou transfer the assets into an Inherited IRA held in your name.olliLife Expectancy Method - Only/li/ol/liliAll assets in the IRA are distributed to you./li/ol/li/olh4strongTraditional IRA / Non-Spouse Inherits/strong/h4pIf you inherit a Traditional, Rollover, SEP, or SIMPLE IRA from a friend or family member, you have several options, depending on whether the account holder was under or over age 70½./polliIf your spouse was under 70½, your choices are:olliYou transfer the assets into an Inherited IRA held in your name.olliLife Expectancy Method/lili5 Year Method/li/ol/liliAll assets in the IRA are distributed to you./li/ol/liliIf your spouse was over 70½, your choices are:olliYou transfer the assets into an Inherited IRA held in your name.olliLife Expectancy Method – Only/li/ol/liliAll assets in the IRA are distributed to you./li/ol/li/olh4strongRoth IRA / Spouse Inherits/strong/h4pIf you are inheriting a Roth IRA as a spouse./polliYou transfer the assets into your own existing or new Roth IRA./liliYou transfer the assets into an Inherited IRA held in your name.olliLife Expectancy Method/lili5 Year Method/li/ol/liliAll assets in the Roth IRA are distributed to you./li/olh4strongRoth IRA / Non-Spouse Inherits/strong/h4pIf you are inheriting a Roth IRA from a friend or family member/polliYou transfer the assets into an Inherited IRA held in your name.olliLife Expectancy Method/lili5 Year Method/li/ol/liliAll assets in the Roth IRA are distributed to you./li/olpspan style=color:#999999emImages courtesy of Ivan @ Flickr/em/span/p