Skip to content

Beneficiary IRA? What is it?

Answered by: 

Question: 
What is an inherited IRA? Can the beneficiary make contributions?
Answer: 

An inherited IRA is an IRA which is used to pay out the decedent’s IRA to his/her beneficiaries. A spouse may treat the IRA as his/her own, but a non-spouse will always inherit the IRA and either take total distribution or set up for payout out of the account. Distributions will be coded “Due to Death” so that the beneficiary will not have any IRS-imposed 10% penalty. The beneficiaries will have to pay taxes owed on the money distributed but no penalty. We typically set up an inherited IRA by an internal transfer into the beneficiary or beneficiaries’ names. On an inherited IRA there are no contributions only distributions.

-----------------------------

Learn more about Deborah Crawford’s webinar Inherited IRAs and Death Distributions - Including a deeper dive into the SECURE Act

First published on 07/05/2020

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics