What Is An Inherited (Beneficiary) IRA?
An Inherited IRA, or a Beneficiary IRA, is an account opened when someone inherits an IRA or employer-sponsored retirement account after the original owner's death.
As a beneficiary, the funds can remain tax deferred, and you can generally withdraw money right away without penalty. However, a designated beneficiary is usually required to liquidate the account by the end of the 10th year following the year of death of the IRA owner.
BENEFITS OF A BENEFICIARY IRA.
Tax-Deferred Growth
If you open an Inherited IRA instead of taking a lump-sum distribution, you can continue to take advantage of potential growth in a tax-advantaged account (maximum deferral period of 10 years for most beneficiaries).
No Income or Age Requirements
Any person may inherit an IRA.
Planning for Spouses
The rules for spouses who inherit IRAs are not the same as for non-spouse beneficiaries.
Do I need to pay taxes on an IRA I inherit?
Do spouses of the decedent use different rules?
How soon must I withdraw the funds from the IRA?
Do inherited Roth IRAs keep the same tax characteristics?
Are contributions allowed for Inherited IRA?