FAQs: Inherited IRAs

See the questions below to get the information you need. For answers to your specific questions, call an experienced retirement consultant at 866-855-5635.

What is an Inherited IRA (otherwise known as Beneficiary IRA)?
Who is eligible to open an Inherited IRA?
If I am a spousal beneficiary, can I treat the IRA as my own?
If I am a non-spouse beneficiary, can I roll over the assets into one of my existing IRA accounts?
Can I leave the assets in the existing IRA account instead of opening an Inherited IRA if I am a non-spouse beneficiary?
Am I able to make additional contributions to an Inherited IRA?
Are there rules for taking distributions from my Inherited IRA?

What is an Inherited IRA (otherwise known as Beneficiary IRA)?

When a beneficiary of a Traditional, Rollover, SEP, SIMPLE or Roth IRA takes possession, the funds are transferred into an Inherited IRA so that the assets remain tax-deferred until the IRS requires that the funds be withdrawn. If you would like more information, order our Schwab Inherited IRA Guide.

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Who is eligible to open an Inherited IRA?

Any spouse or non-spouse that has been named the beneficiary of a Traditional, Rollover, SEP, SIMPLE or Roth IRA is eligible to open an Inherited IRA.

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If I am a spousal beneficiary, can I treat the IRA as my own?

Yes. You can transfer the existing IRA into your name and defer distributions until you are required to take the Required Minimum Distribution (RMD). You can also choose to open an Inherited IRA if you plan to take a distribution before you reach age 59 ½. It is advised that you consult with a tax advisor for more details.

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If I am a non-spouse beneficiary, can I roll over the assets into one of my existing IRA accounts?

No. Only spousal beneficiaries can treat Inherited IRA assets as their own by transferring the assets into a new or existing Traditional, Rollover, SEP, SIMPLE or Roth IRA.

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Can I leave the assets in the existing IRA account instead of opening an Inherited IRA if I am a non-spouse beneficiary?

No. As a non-spouse beneficiary, you cannot leave the assets in the original account holder's IRA and continue distributions from that account. You can either transfer the assets into an Inherited IRA or take a lump sum distribution.

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Am I able to make additional contributions to an Inherited IRA?

No. Contributions to Inherited IRAs are not permitted.

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Are there rules for taking distributions from my Inherited IRA?

Yes. If, as the beneficiary, you decide to open an Inherited IRA, certain rules will determine when you must take your distributions. These rules are based on the type of IRA inherited, the age of the original accountholder at his/her death, and the type of Inherited IRA opened. If you would like more information, visit our Inherited IRA center, or order our Inherited Retirement Account Guide.

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PLEASE READ THE IMPORTANT DISCLOSURES BELOW
This tax information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager.

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