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Taking Distributions From Inherited IRAs

How Do I Draw Down Money From An Inherited IRA

Types of Distributions

When you inherit an IRA from someone you will have to choose how you would like to take it. There are several options when this happens, so I thought I would take a few minutes to explain them. If you are a non-spouse beneficiary, you have the following three options:

  • Lump sum distribution
  • Distribution over 5 years
  • Lifetime distribution (if you choose this option, your age will be plugged into the life expectancy table each year to determine the amount of your distribution)

Distributions Based On Beneficiary Types

If you are a spouse beneficiary, you have the above options and you will also have the option to treat the IRA as your own. In this scenario, you will take over the IRA in your own name and you will be able to contribute to the IRA, take distributions and invest, just as if it were your own IRA.

If you have questions, please speak with your CPA or tax professional.

 Here’s another good article that I came across that discusses Inherited IRAs:

Non-Spouse Inherited IRAs: How to Avoid Making Common Mistakes

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.