Inheriting an IRA

[Guest Donaldson]

I am aware that a surviving spouse who inherits an IRA from a deceased spouse can roll over the IRA and will not be required to take required minimum distributions until he/she reaches his/her required beginning distribution date.

Does anyone know if the law has changed for non-spousal beneficiaries so that now they too can roll over an inherited IRA and not be required to take required minimum distributions?

Does anyone know the statute or regulations that cover this area?

Thanks to everyone and have a wonderful weekend.

[SoCalActuary]

Start with the IRS publications at www.irs.gov, specifically Pub 575.

In addition, follow the newest published guidance on IRC 401(a)(9), which sets out the rules for lifetime benefits of beneficiaries. Among your concerns are:

Is the beneficiary a named individual, or is it a trust?

Is the IRA to be divided between multiple beneficiaries?

[Guest Donaldson]

Thank you very much for your reply. I will check the references you mentioned.

Does anyone happen to know the answer off the top of their heads? A few articles that I have seen say that a non-spouse beneficiary is not entitled to the special rollover treatment that a spousal beneficiary gets. However, a few people have told me that the law changed in 2002 or thereabout so that now both spousal and non-spousal beneficiaries may rollover.

Thank you for your thoughts.

[Bird]

No, a non-spouse IRA bene cannot roll over to his or her own IRA. The beneficiary must continue to take, or start taking, minimum distributions.

As an aside, the bene isn't necessarily "stuck" with the existing IRA and its investment options. Some (maybe all) investment companies will allow the bene to transfer an existing IRA into a beneficiary payout account, which for all intents and purposes is a rollover on behalf of the decedent.

[Guest Donaldson]

Thank you very much for clarifying things for me.