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Inherited IRA Options That Are Easy to Understand

Inherited IRA’s Raise a Lot of Questions

Inherited IRA Options

Inherited IRAs can be handled in a few different ways, depending on the beneficiaries relationship to the deceased IRA account holder. There are three types of beneficiaries: spouse, non-spouse or non-person beneficiary. Spouse is pretty self-explanatory. A non-spouse would be anyone other than a spouse and a non-person beneficiary would be a family trust, estate, charity, etc.

If you are a spouse beneficiary, you will have the following options:

  • Treat IRA as your own
  • Five-year rule (must take out the entire balance of IRA within five years)
  • Single life expectancy (take funds out over your life expectancy based on the IRS life expectancy table)
  • Distribute as lump sum

If you are a non-spouse beneficiary, you will have the following options:

  • Five-year rule benificiary,
  • Single life expectancy
  • Distribute as lump sum

For non-person beneficiaries, they will have the following option:

Five-year rule

Terry White

About Terry White

I started my business career after getting my degree in Accounting from the University of New Mexico in 1983. My first job was as a controller for a local title company, and in 1987 I started First Financial Escrow, Inc. Over the years I played a part in several startup companies including First Financial Equities, Inc., First Financial Trust, Inc., First Financial Marketing, Inc. and Asset Ventures, Inc. In 1997 First Financial Escrow, Inc. was able to purchase the escrow accounts from Sunwest Bank and changed its name to Sunwest Escrow. As the market changes, Sunwest has grown and changed along with it. Besides my wife, Sheila, we have three boys, two daughters-in-law, one grandson, another grandson on the way and a future daughter-in-law. Sunwest is my passion, and I enjoy coming to work every day to see what will happen next. I enjoy fly fishing, spending time in Colorado, biking and watching my boys play soccer.